Could the Underused Housing Tax affect you?

Discover the filing Obligations for the UHT.

On January 1, 2022, the Underused Housing Tax came into effect in Canada. This yearly levy applies to vacant or unused real estate property owned by non-residential foreigners with a rate of 1%. While this tax normally affects foreign homeowners without Canadian citizenship, it can potentially be imposed on other entities such as Private Corporations from within Canada and Trustees/Partners associated with Bare Trusts/Partnerships.

It is mandatory for non-resident Canadian property owners to submit a UHT return (UHTR) yearly. Also, any individual or organization with foreign ownership/beneficiaries – including those without owing tax – need to file the form by April 30th in order to stay compliant. This is especially important, as it can apply to partnerships of Canadian citizens and residents. Failing to abide by this requirement can result in hefty fines; individuals will owe at least $5,000 and other entities are required to pay a minimum of $10,000 per violation.

Am I required to file an annual UHTR?

Unless you have an exemption under the Underused Housing Tax Act, if you own residential property in Canada on December 31st, you are required to file a UHTR.   

If you fall into one of the following categories, you are NOT REQUIRED to file a UHTR:  

  • Canadian citizens 
  • Permanent residents 
  • Public Colleges, Universities, and school authorities 
  • Public corporations 
  • Hospital authorities 
  • Cooperative housing corporations 
  • Municipalities, or corporations owned by such entities 
  • Registered charities 
  • Indigenous governing bodies or corporations owned by such entities 
  • The Government of Canada, Provincial Government, or agent of either 
  • Various forms of publicly traded trusts 

However, even if you are a Canadian citizen or permanent resident, if you belong to one of the following categories, YOU ARE STILL REQUIRED to file a UHTR:  

  • Non-resident individuals, that are not citizens or permanent residents of Canada
  • Partner of Partnership
  • Private Corporations  
  • Trustee of a Family or Bare Trust  
How is the UHT calculated?

To calculate the UHT payable, simply multiply 1% of the assessed or appraised value on December 31st by your applicable ownership percentage. The property’s value is the greater of the assessed value for the year for property tax purposes, and the most recent sale price during the year.

Owners have the choice to choose fair market value for their assets as long as they get a written appraisal that can back it up. They must make this election by April 30 of the following calendar year.

Could I be exempt from the UHT? 

While under the UHT Act you may need to file a UHTR, you may not be liable to pay the tax In accordance with several legal exceptions.

Depending on the owner, occupant, availability of the property and its location and use, these exemptions may be applicable.

Get more information

You can read even more about the UHT on the Government of Canada’s page or the CPA page.

You can download the form to start the filing process yourself here.

We are here to help you navigate this new tax initiative. If you have any questions or concerns regarding the UHT or your filing requirements, please do not hesitate to contact us at 604-534-7701 or email us at info@jeskeco.com.