Underused Housing Tax

A new tax called the Underused Housing Tax (“UHT”) has been implemented by the Canadian government and took effect January 1, 2022.

UHT is an annual tax on vacant or underused Canadian housing. It is applies non-resident non- Canadian owners however Canadian residents may also be impacted.

UHT is calculated at 1% of the market value of the residential property for the 2022 calendar year.

You may be required to file a UHT return even though there is no UHT owing. If so, the return must be submitted by April 30, 2023.

You must file a UHT return if at Dec 31, 2022: 1) You are the legal owner of Canadian residential property 2) You are not considered an “excluded owner” of the property.

“Excluded Owner” includes:

1. Canadian citizens or permanent residents unless included in the list of affected owners.
2. Individual Canadian citizens or permanent residents that own a residential property as a trustee of a mutual fund trust, real estate investment trust, or SIFT
3. Canadian corporation whose shares are listed on a Canadian stock exchange designated for Canadian income tax purposes
4. Registered charity for for Canadian income tax purposes
5. cooperative housing corporation for Canadian GST/HST purposes
6. an Indigenous governing body or corporation wholly owned by an Indigenous governing body.

You may have to file a return if you are an affected owner. An affected owner includes:

1. You are a Canadian citizen or corporation and you hold a residential property via a partnership.
2. You are Canadian citizen or corporation and you are the trustee of a trust that holds the residential property (does not include where the trust is created by the death of another person/testamentary trust.
3. You are a Canadian private corporation that owns a residential property.
4. You are a non Canadian corporation that owns a residential property.
5. You are a non resident of Canada that own residential property.
6. You are a co owner of a residential properrty.
7. You are the owner of farmland on which a residential property is located.

Again, you may be required to file a return even if you are exempt from paying the UHT / Tax.

Exemptions are based the type of owner you are, the availability of the residential property, the location and use of the residential property, and the occupant of the residential property.

Failure to file on time could result in penalties starting at $5,000.00 for individuals and $10,000.00 for corporations.

You should speak with an accounting or tax professional for advice on the tax implications. We are real estate lawyers but not accountants, so this article is for information only and should not be relied on as tax advice. We are happy to help with the conveyancing when looking to buy or sell a home. Contact Us today with questions or to get started.