The federal government’s 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.
The tax generally applies to foreign national owners (i.e., someone who is not a Canadian citizen or permanent resident) of housing in Canada. This tax can also apply to some Canadian owners (such as certain partners, trustees, and corporations) in certain situations.
If you are impacted by this tax, you must file an Underused Housing Tax return for each of your eligible properties in Canada. If there are several affected owners of the property, each affected owner must file a separate return for the property.
The government has created a tool to see if you are impacted by this tax, which you can find on its website.
Residential property owners that are affected by the Underused Housing Tax (UHT) have until April 30, 2024, to file their returns and pay the tax for the 2022 calendar year without being charged penalties or interest.
Depending on your jurisdiction, you may also be subject to different provincial or municipal government taxes related to underused housing. Be sure to consider whether you have any other tax obligations related to your property holdings for your 2023 tax return!