Underused Housing Tax (UHT)
What is it?
It is an annual 1% tax on the value of residential real estate. This started on Jan 1, 2022.
Step 1 - Is it applicable to you?
If you (or your corporation) own a residential property in Canada as of Dec 31 then go to the next step. If not, the UHT act is not applicable to you and you can stop reading this article.
Step 2 - Are you required to file?
- If you are not a Canadian citizen or a permanent resident of Canada (for immigration purposes), then you need to file. Penalty for not filing is $5,000.00
- If you own the residential real estate through a Canadian corporation – still need to file. Penalty for not filing is $10,000.00
- any person - including an individual who is a Canadian citizen or permanent resident - that owns a residential property as a partner of a partnership
Basically, you need to file, unless you are an excluded owner. Refer to the link below for a list of excluded owners but if you answered yes to (a) or (b) or (c) above, then you are not an excluded owner and must file the information return for each property you owned as of Dec 31th (2022). Information return is filed on form UHT-2900. The due date to file is by April 30 of the following year (2023).
Step 3 – Are you required to pay the UHT?
If you got this far that you need to file the return. Now, the question is if you need to pay. No tax will occur if you meet one of the exemptions. Most common exemptions for my clients, are below. Full list is in the link: Underused Housing Tax - Canada.ca
Exemption due to type of owner
- Property is owned by a corporation and 90% or more of the shares are owned by Canadian citizens or PRs.
- New owner – property acquired in the year and that owner didn’t own the property in the last 9 years.
- Owner died in the year or prior year
Exemption due to availability of property
- Property is under construction and is not substantially completed before April of the year
- Construction is completed after March, property put on sale and the property was never occupied during the year
- Property is not suitable to be lived in year-round or seasonably inaccessible due to public access not maintained year-round.
- Uninhabitable for at least 60 days due to disaster – see details in the link
- Uninhabitable due to 120 consecutive days of major renovations – see details in the link
Exemption due to occupant of the property
- Primary place of residence of the owner of the property/their spouse or a child, that attends a designated learning institution.
- Continuous occupancy for at least a month and a total of 180 days in the year
- Occupant is a tenant who pays a fair market value
- The owner of the property (or their spouse) holds a Canadian work permit
- The owner of the property (or their spouse or their child) is a Canadian citizen or a PR.
Exemption based on location
if the property is a vacation property located in an eligible area of Canada and used by you or your spouse or common-law partner for at least 28 days in the calendar year
Use the CRA designation tool to determine if your residential property is located in an eligible area: Underused housing tax vacation property designation tool (cra-arc.gc.ca)
How to file
Return can be filed on paper, but it is faster and more secure to file online. For that, digital access code is required.
- If you are an individual owner and have a Canadian SIN (not corporation), use this link to request the access code: Need a Digital Access Code? (cra-arc.gc.ca)
- If corporation is the owner of the property, then:
- First go here: How to register for a business number or Canada Revenue Agency program accounts - Canada.ca to obtain an Underused Housing Tax Business Number. Which is going to be your BN followed by RU. Click on “Register”
b. And only then request the access code: Underused Housing Tax (UHT) Digital Access Code Online (cra-arc.gc.ca)