Quick facts about the new Underused Housing Tax

by | Apr 1, 2024 | Finance and Business

You may or may not have heard that there’s an Underused Housing Tax (UHT) in Canada. Is it what you think it is? Does it apply to you? Here are few quick facts you should know.

  1. It’s not the vacancy tax you’ve heard about
    You may have heard of vacancy taxes in some provinces and municipalities, but those taxes are not the same as the UHT, which is a federal tax that took effect in January 2022. Someone who must pay a regional vacancy tax may or may not be affected by the UHT and vice versa. If you are exempt from one tax, you may still be required to file a return and pay the other tax.
  2. If you own residential property, you could be affected
    The UHT usually affects foreign nationals, meaning those who are not Canadian citizens or permanent residents, who own residential property here in Canada, or foreign corporations. But, in some situations, this tax also applies to Canadian individuals and corporations.
  3. If you’re affected, you have to file – maybe multiple returns – even if you’re exempt
    If you’re an affected owner, you may be exempt from paying the tax for a year depending on things like the location of the property and the type of occupant; however, you’re still required to file a return to claim your exemption. If you own more than one residential property, you must file a separate return for each property. If you’re one of several affected owners of a property, each owner must file a separate return.
  4. It’s due at the same time as income taxes but it’s not the same return
    The Canada Revenue Agency must receive 2022 and 2023 UHT returns and any payments owed by April 30, 2024, to avoid penalties and interest. Note that even though this is the same date the income tax and benefit return is due for most people, the UHT is a separate return.

To find out if you’re affected for the 2022 tax year, you can use the CRA’s online self-assessment tool at canada.ca/cra-uht. The 2023 tax year rules may be different.

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