PERSONAL TAX TRAINING

UNDERUUSED HOUSING TAX (UHT): A COMPREHENSIVE GUIDE

The Underused Housing Tax (UHT) is an annual tax introduced by the Canadian government on January 1, 2022. It aims to address housing shortages by discouraging vacant and underused properties. This tax primarily affects non-resident, non-Canadian owners of residential properties.

Key Features

• Tax Rate: 1% of the residential property’s taxable value or fair market value.
• Scope: Applies to properties such as detached houses, duplexes, and condominiums.
• Primary Goal: Encourage effective property use to make housing available for Canadians.

Who is Affected by the UHT?

The UHT applies to the following groups:

• Non-Resident, Non-Canadian Individuals: Those who are not Canadian citizens or permanent residents.
• Corporations: Corporations not incorporated in Canada or controlled by non-residents.
• Trustees and Partners: Trustees of trusts and partners in partnerships holding residential properties.

Exemptions from the UHT

Some owners and properties are exempt from this tax, including:

• Canadian citizens or permanent residents.
• Primary residences or properties rented out under qualifying tenancy agreements.
• Newly constructed or unsold properties.
• Properties in rural vacation areas or those rendered uninhabitable.

Filing and Payment Obligations

Affected owners must comply with these requirements:

• File Form UHT-2900: By April 30 of the following calendar year.
• Register for a Business Number: Obtain a CRA business number for tax filing.
• Pay the Tax: The 1% tax is due by the filing deadline.

Penalties for Non-Compliance

Failing to comply with UHT requirements can lead to significant penalties, starting at:

• $5,000 for individuals.
• $10,000 for corporations.

FAQs

Do Canadian citizens pay the UHT? No, they are generally exempt unless the property falls under specific taxable conditions.

What happens if I sell the property during the tax year? You may still need to file a return for the portion of the year you owned the property.

For more information, visit the CRA’s official UHT page.