The Underused Housing Tax is an annual 1% tax on the ownership of vacant or underused housing in Canada that took effect on January 1, 2022.

Underused Housing Tax

To whom it applies?

The tax usually applies to non-resident, non-Canadian owners. In some situations, however, it also applies to Canadian owners. (the “Affected Owner”)

Who is an Affected Owner?

An?affected owner?includes, but is not limited to:

·?an individual who is not a Canadian citizen or permanent resident

·?an individual who is a Canadian citizen or permanent resident and who owns a residential property as a trustee of a trust (other than as a personal representative of a deceased individual)

·?any person - including an individual who is a Canadian citizen or permanent resident - that owns a residential property as a partner of a partnership

·?a corporation that is incorporated outside Canada

·?a Canadian corporation whose shares are not listed on a Canadian stock exchange designated for Canadian income tax purposes

·?a Canadian corporation without share capital

What to do?

If you are an affected owner, you must file an?Underused Housing Tax return?for each residential property that you own in Canada on?December 31. You must also pay the Underused Housing Tax, unless your ownership qualifies for an exemption for the calendar year.?Even if your ownership qualifies for an?exemption, you must still file an Underused Housing Tax return for the calendar year.

When to file an UHT?

Before?November 1, 2023.

For the 2022 calendar year: When a fair-market-value election for a residential property, or an election/joint election to designate a residential property, is filed as part of a late-filed UHT return, the CRA will allow the election, as long as the return is filed by?October 31, 2023.

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