What Is the Underused Housing Tax?
Overview
| Element |
Details |
| What it is |
1% annual tax on residential property value |
| Who pays |
Certain non-Canadian owners |
| Purpose |
Discourage vacant foreign-owned housing |
| Effective |
January 1, 2022 |
The 1% Tax
| Calculation |
Example |
| Property value |
$800,000 |
| Tax rate |
1% |
| Annual tax |
$8,000 |
Who Must File
Affected Owners (Must File)
| Owner Type |
Filing Required |
| Foreign nationals |
Yes |
| Non-PR individuals |
Yes |
| Foreign corporations |
Yes |
| Canadian corps (certain) |
Yes, if affected |
| Trustees of trusts |
Yes, some |
| Partners in partnerships |
Yes, some |
Excluded Owners (No Filing)
| Owner Type |
Filing Required |
| Canadian citizens |
No |
| Permanent residents |
No |
| Canadian publicly-traded corps |
No |
| Certain registered charities |
No |
| Indigenous governing bodies |
No |
| Government bodies |
No |
Common Scenarios
Must File UHTA Return
| Scenario |
Result |
| US citizen owns cottage |
Must file |
| Private Canadian corp with foreign shareholders |
May need to file |
| Trust with foreign beneficiary |
Must file |
| PR owns through foreign corp |
Corp must file |
Don’t Need to File
| Scenario |
Result |
| Canadian citizen owns home |
No filing |
| PR owns cottage |
No filing |
| Public company owns building |
No filing |
Exemptions from TAX (Not Filing)
If You Must File, You May Be Exempt From TAX If:
| Exemption |
Details |
| Primary residence |
If owner lives there |
| Qualifying occupancy |
Tenant or family member |
| New construction |
Construction year |
| Death of owner |
Year of death + 1 |
| Disaster |
Uninhabitable |
| Significant renovations |
Seasonal exemption |
Qualifying Occupancy Exemption
| Occupant |
Minimum Period |
| Arm’s length tenant |
180 days |
| Family member |
180 days |
| Written agreement |
Required |
Who Counts as Family
| Relationship |
Qualifies |
| Spouse/partner |
Yes |
| Parent |
Yes |
| Child |
Yes |
| Grandparent |
Yes |
| Grandchild |
Yes |
| Sibling |
Yes |
Filing Requirements
Deadline
| Tax Year |
Filing Deadline |
| 2023 |
April 30, 2024 |
| 2024 |
April 30, 2025 |
| 2025 |
April 30, 2026 |
What to File
| Form |
UHT-2900 |
| Filing |
Online or paper |
| Per property |
Separate return each |
| Information |
Property, owner, exemption claim |
Penalties
Failure to File
| Owner Type |
Minimum Penalty |
| Individual |
$5,000 |
| Corporation |
$10,000 |
Plus any tax owing with interest.
Example: Failure to File
| Scenario |
Cost |
| Exempt from tax |
Still $5,000 penalty |
| Tax owing + late |
$5,000 + tax + interest |
False Statements
| Penalty |
Up to |
| Gross negligence |
Greater of $10,000 or 50% of tax |
Canadian Corporations
When Canadian Corps Must File
| Situation |
Filing Required |
| No foreign shareholders |
Usually no |
| Foreign shareholder >10% |
May need to file |
| Complex structures |
Get advice |
Safe Harbors
| Exemption |
Details |
| Publicly traded |
Excluded owner |
| 90%+ Canadian ownership |
May be excluded |
| Small foreign share |
May still need to file |
Practical Steps
If You’re Affected
| Step |
Action |
| 1 |
Determine if excluded owner |
| 2 |
If not, must file return |
| 3 |
Determine if exemption applies |
| 4 |
File by deadline |
| 5 |
Pay any tax owing |
Record Keeping
| Document |
Why |
| Proof of citizenship/PR |
Excluded owner status |
| Lease agreements |
Qualifying occupancy |
| Residency records |
Primary residence |
| Property ownership docs |
Filing accuracy |
Special Situations
US Citizens Living in Canada
| Situation |
Result |
| US citizen, not PR |
Must file |
| May claim exemption |
If primary residence |
| Recommendation |
Apply for PR |
Snowbirds with Foreign Property
| Situation |
UHTA Applies? |
| Canadian owns Florida condo |
UHTA is Canadian tax |
| US condo |
Not subject to UHTA |
| Foreign property in Canada? |
Yes, if foreign owner |
Multiple Owners
| Situation |
Filing |
| Joint owners |
Each files (pro-rata) |
| One excluded, one affected |
Affected owner files |
| All excluded |
No filing |
Professional Help
When to Get Advice
| Situation |
Recommendation |
| Corporate ownership |
Tax professional |
| Trust ownership |
Tax professional |
| Uncertain status |
Get clarification |
| Multiple properties |
Tax professional |
Cost of Non-Compliance
| Item |
Potential Cost |
| Minimum penalty |
$5,000-$10,000 |
| Tax owing |
1% of property value |
| Interest |
Prescribed rate |
| Professional fees to fix |
$1,000-$5,000 |
Filing even when exempt is much cheaper than penalty.
Foreign Buyer Taxes
| Tax |
Jurisdiction |
Rate |
| UHTA |
Federal |
1%/year |
| Foreign Buyer Ban |
Federal |
Prohibition |
| Speculation Tax (BC) |
Provincial |
0.5-2% |
| NRST (Ontario) |
Provincial |
25% |
Comparison
| Feature |
UHTA |
Speculation Tax |
| Frequency |
Annual |
Annual |
| Rate |
1% |
0.5-2% |
| Base |
Value |
Value |
| Exemptions |
Some occupancy |
Some |
Summary
Key Points
| Point |
Details |
| Canadian citizens/PR |
Don’t need to file |
| Foreign owners |
Must file (with exceptions) |
| Exemptions available |
But must still file |
| Penalties |
$5,000+ minimum |
| Deadline |
April 30 each year |