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Underused Housing Tax (UHT)

February 9, 2023

Dear Clients,

Beginning for 2022, the government has introduced the Underused Housing Tax (“UHT”).

The UHT imposes a 1% annual tax on the value of residential real estate considered to be vacant or underused that is owned on December 31 of each year. The government indicated that the tax would target property owned by non-Canadians; however, the scope of filing requirements extends to many Canadian entities and individuals, including Canadian controlled private corporations and trustees of a trust even if the house is not vacant. The first filings and taxes are due on April 30, 2023.

separate filing is required for each owner of each property. Individual owners that fail to file the return on time are subject to a minimum $5,000 penalty, while other entities are subject to a minimum $10,000 penalty.

If you would like Roth Mosey to assist with your UHT filing or to discuss your obligation, please reach out to Ashley Docherty ( immediately. Otherwise, we will assume you are taking responsibility for this filing obligation.

We have attached a flow chart outlining some of the common considerations for the UHT. Full details on how the UHT tax operates can be found on the CRA website here.

UHT Highlights

There are generally three categories of filing obligations:

1. Own residential property but are not required to file an annual return

  1. Excluded owners are not required to file a UHT return.
  2. Examples in this category are:
    1. Individual Canadian citizens or permanent residents (under the Immigration and Refugee Protection Act)
      • Note - individuals that hold an interest in the property as a partner of a partnership or as a trustee of a trust (other than personal representatives of a deceased individual [i.e. executor of an individual’s will] ) do not qualify for this exclusion.  An example of this could include a bare trust arrangement where an individual or corporation is on legal title but does not have any beneficial ownership in the property, such as:
      • probate planning completed such that a child or a corporation holds legal title to a property, but a parent retains beneficial owner,
      • to facilitate mortgage financing a parent holds legal ownership of a property but a child is the beneficial owner of the property.
      • a legal owner is registered on title to avoid multiple properties to be merged into one property in accordance with the Ontario Planning Act.
    2. registered charities
  3. No further action is required if you are in this category.

2. Own residential property and have a filing obligation but are not subject to tax
  1. Owners that are not an “Excluded Owner” (i.e. category 1 above) may have an obligation to file a UHT return but be exempt from paying UHT Tax.
  2. Common examples in this category would include:
    1. Canadian corporations with all Canadian shareholders, including a corporation that develops residential real estate for resale or a corporation that holds legal title to a “bunk house” or other property housing workers.
    2. Trusts where each beneficiary is an excluded owner or Canadian Corporation with all Canadian shareholders, and
    3. Partnerships where all members are an excluded owner or Canadian Corporation with all Canadian shareholders
  3. There are numerous other circumstances that can result in an exemption from paying the UHT tax. A full list of all exemptions can be found in the chart attached.
  4. While not subject to the UHT Tax, owners in this category must file a return claiming the exemption or be subject to penalties

3. Own residential property and have a filing obligation and a tax obligation
  1. This includes owners of residential property not in category 1 or 2 above.
  2. The UHT is 1% of the greater of the property’s assessed value for the year for property tax purposes and the most recent sale price, applied to the ownership percentage. An owner can also elect to use the property’s fair market value as determined at any time during the year and up to April 30 of the following year. CRA requires an appraisal with specific parameters to use this election.

How to file your return?

The owner must have a valid tax identification number when filing a UHT return. Examples include:
  • a social insurance number (SIN)
  • an individual tax number (ITN)
  • a Canadian business number (BN) with an Underused Housing Tax (RU) program account identifier code which must be obtained prior to filing.
Note - A trust account number (TAN) cannot be used to file Underused Housing Tax returns.

File the return (Form UHT-2900) using the paper return located here. There may also be a method to file a return online using CRA’s My Business Account but details have not been released.

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