The underused housing tax (UHT) is a Federal tax applied to vacant or underused housing in Canada, effective January 1, 2022. Generally speaking, this tax targets foreign property owners, but certain Canadian owners may be impacted, see the examples below.
There are significant penalties for affected owners who fail to file an annual return when it is due, with a minimum penalty of $5,000 for individuals who are affected owners, and $10,000 for owners other than individuals.
Who Has to File a Return?
A Form UHT-2900 (Underused Housing Tax Return and Election Form) needs to be filed for each of your properties when all of the following conditions are met on December 31 of a calendar year:
- The property is a residential property
- You are an owner of the residential property
- You are not an excluded owner of the residential property
Note: Affected owners required to file a return may not have to pay the UHT if they are exempt. Details surrounding the exemptions can be found here.
What is a Residential Property?
Residential property is defined as property that is either of the following:
- A detached house or similar building containing no more than three dwelling units, along with any appurtenances and the related land.
- A semi-detached house, rowhouse unit, residential condominium unit or other similar premises, along with any common areas, appurtenances, and the related land.
Definitions:
- Dwelling Unit: a residential unit is suitable to be used as a residence containing a private kitchen facility, private bath, and private living area.
- Related Land: land that is subjacent or immediately contiguous to a residential building and considered reasonably necessary for the building’s residents’ use and enjoyment. Generally, up to a half hectare of land is included as residential property.