Underused Housing Tax (UHT) Is Now Law

The Underused Housing Tax (UHT) is now law, and if you own residential property in Canada you will want to take note of it. While the UHT is generally designed to tax residential properties that are considered vacant or underused and not owned by Canadian citizens or permanent residents of Canada, many individuals, corporations, trustees, executors, and partners who hold legal title to residential real estate in Canada may have to file a UHT return by April 30, 2023*, even if no tax is owing, or potentially face steep penalties.

Generally, if you:

• did not own residential property on December 31, 2022; or

• are a Canadian citizen or permanent resident of Canada who personally owned residential property (not as a trustee of a trust or partner of a partnership)

then you are excluded from filing a return. While there are a few other exclusions, almost all other individuals, Canadian private corporations, trustees, executors, and partners will need to file a separate UHT return for each residential property owned, whether or not the tax actually applies.

 Owner of a residential property means a person that is identified as an owner in respect of the residential property under the land registration system or another similar system applicable where the residential property is located, or that could reasonably be considered to be an owner in respect of the residential property based on such a system. Includes various life interests and long-term lease arrangements.

Residential property means property that is situated in Canada and that is:

• a detached house or similar building, containing not more than three dwelling units, that can be used as a place of residence for individuals;

• a part of a building that is a semi-detached house, rowhouse unit, residential condominium unit, or other similar premises that can be used as a place of residence for individuals; or

• a prescribed property.

* Note that the UHT return is due each year on April 30 regardless of the owner’s year-end date for income tax purposes. Since that date falls on a Sunday this year, the actual filing deadline will be Monday, May 1, 2023. This coincides with the filing deadline for most personal income tax returns, but please note that the UHT return is a separate form and is not filed as part of any personal, corporate, or trust tax return. You can find a copy of the UHT return (CRA form UHT-2900) on the CRA website. For more information, including instructions for filing it, please visit the UnderusedHousing Tax section on CRA’s website.

Please consult your tax lawyer or accountant for more information. Information here is provided as a courtesy for our clients and reliance on this information is entirely upon your own risk

Source: Nova Scotia Association of Realtors® and  Baker Tilley