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Basic facts you need to know about the Underused Housing Tax

Unused-housing-tax-uht-basic-facts

Canadian citizens & residents who own houses should be familiar with the Underused Housing Tax (UHT)’s various provisions to understand how they can be affected.

What is the Underused Housing Tax (UHT)?

Effective January 1, 2022, the Underused Housing Tax (UHT) is a 1% yearly government tax on the ownership of unused or vacant housing in Canada.

In general, the Underused Housing Tax applies to foreign nationals who own houses in Canada. In some circumstances, certain Canadian owners are also subject to this tax (such as certain corporations, trustees, and partners).

Who does this tax apply to?

Owners of residential properties can be divided into two groups: exempt owners and affected owners.

Excluded Owners:

These owners, who include citizens and permanent residents of Canada, are not required to file taxes or report UHT. They are exempt from the Underused Housing Tax regulations.

Affected Owners:

The affected owners include, but are not limited to, the following owners of a residential property in Canada:

  • A foreign national (a person who is neither a citizen nor a permanent resident of Canada).
  • A citizen or a permanent resident of Canada who owns a residential property in Canada as a trustee of a trust.
  • A person who is a partner of a partnership owns a residential property and is a citizen or permanent resident of Canada.
  • A corporation that is not based in Canada.
  • A Canadian corporation does not have its shares listed on a Canadian stock exchange for Canadian income tax.
  • A Canadian corporation that doesn’t have share capital.

Pro Tips - Underused Housing Tax (UHT)

  • You are required to pay the tax if you are not eligible for an exemption.
  • If you are an affected owner, you are required to file a return for every residential property you own.
  • You will need to file a separate return for each Canadian residential property you own.
  • If the residential property is owned by many people, each of you must file a separate return for the property.

How can an Accountant help?

A large number of Canadian property owners are unaware of the UHT or do not even recognize that it exists. One Accounting professional advises property owners to take steps to educate themselves on whether they may be holding a property that will be subject to the rules. Contact us now! You must become familiar with the UHT to avoid paying unnecessary charges.

Please visit the Canada Revenue Agency’s (CRA) new UHT page for additional details, which also includes technical assistance and additional information.

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