What is the Underused Housing Tax?
It is not safe to assume that the Underused Housing Tax may not apply to you just because you are a Canadian Citizen or a Permanent Resident. You may have to file UHT return to declare the exemption or face significant penalties for failure to file.
If you are an owner of residential property in Canada on December 31, you may have to file an annual return for the calendar year and pay 1% of the taxable value of the property as of December 31. This is a federal tax. This is in addition to similar vacancy taxes already administered by certain provinces and municipalities.
Annual UHT returns are due by April 30 of the following calendar year.
Are you impacted?
The UHT rules categorize owners of residential property in two broad groups:
**Under Canadian provincial and territorial common law statutes, a partnership is defined as the relation (or relationship) that subsists (or exists) between persons carrying on a business in common with a view to profit. Click this link to understand the difference between Co-owner and Partner in a Partnership.
Do you benefit from Exemption if you are an “Affected Owner”?
All “Affected Owners” have to file UHT return, however you may be exempt from tax obligation depending on:
- the type of owner you are
- availability of the property
- location and use of the property
- occupant of the property
Special rule for individual owners of multiple residential properties
If you jointly own multiple residential properties with your spouse or common-law partner, your ownership may not be eligible for the exemptions for either primary place of residence or qualifying occupancy unless you submit an election to the CRA designating just one property for the exemption’s purposes.
What happens if you do not file the UHT return?
Significant penalties may apply if annual UHT returns are not filed:
- $5,000 for individuals
- $10,000 for owners that are not individuals
Additional penalties and interest may apply on outstanding taxes that are not paid by April 30.
How do you file UHT return?
If you are an “Affected owner”, you will need to file UHT return using Form UHT-2900, Underused Housing Tax Return and Election Form, which can be found on the CRA website using this link.
What shall I do if I need help?
If you are not sure about the above rules, Capital Tax team can help by evaluating the application of UHT rules for you. You can contact us at info@capitaltax.ca or call 647-408-7494.