This affects Canadian individuals, private corporations and partnerships, as well as non-residents.
Underused Housing Tax is an “Annual Federal 1% tax on the ownership of vacant or underused housing in Canada that took effect on January 1st, 2022.
You must file a UHT for Each of your properties in Canada for which All of the following conditions are met on December 31.
> The property is a residential property and
> You are the owner of the residential property and
> You are determined to be an affected owner of the residential property
Residential property means:– Either a detached house or similar building that contains a maximum of 3 dwelling units including the related land OR
A Semi-detached house, rowhouse unit, or condominium including the related land.
If you have more than one residential property in Canada, you must file a separate return for each property.
Affected Owners must file tax by October 31 2023 for the year 2022, and the payment shall be made by April 30th of the following calendar year
Remember the following may be exempt from paying the tax if the property is :-
USED AS A PRIMARY PLACE OF RESIDENCE or
USED FOR QUALIFYING OCCUPANCY must be occupied by the qualifying occupant for one or more qualifying periods totaling at least 180 days in the calendar year.
NEWLY CONSTRUCTED
NOT SUITABLE TO LIVE IN THE YEAR-ROUND or SEASONALLY INACCESSIBLE
UNINHABITABLE FOR A CERTAIN DAYS due to RENOVATION OR DISASTER.
Please note You must file a UHT return for the calendar year, even if you qualify for an exemption from paying the tax
If CRA do not receive your return on time, the penalty will be $5,000 for individuals and $10,000 for corporations
You may be an affected owner if
You were added to the title of someone’s home for financing purposes only, and are not a “beneficial owner” – i.e., you wouldn’t get part of the proceeds if the home was sold. You are considered a “bare trustee” (trustee of a trust) and must file the UHT return. You will also have to file a T3 trust return in 2024 for 2023 under new reporting rules.
You were added to the title of someone’s home for estate planning purposes only, and are not a “beneficial owner” – again, you are a bare trustee and must file the UHT return. You will also have to file a T3 trust return in 2024 for 2023 under new reporting rules.
You are the joint owner of a residential rental property, and the rental income is reported jointly – UHT return is probably required.
You are the joint owner of a home, and you and your spouse/partner operate a business on/from the property – you are considered to own the property in your capacity as a partner of a partnership. Most farmers in Canada have to file the return because of housing units on their farms.
You are a shareholder in a Canadian private corporation that owns a “housing unit” (which does not have to be zoned residential). The penalty for not filing is a minimum of $10,000.
This blog is for educational purposes only
