Canada’s Underused Housing Tax was a federal 1% annual levy on vacant or underused residential property, aimed primarily at foreign owners. It took effect on January 1, 2022, and has been eliminated for the 2025 calendar year and every year after.1Canada Revenue Agency. How to Complete the Return and Calculate the Tax – Underused Housing Tax If you own residential property in Canada now, there is nothing to file and nothing to pay. If you had a filing obligation for 2022, 2023, or 2024 and missed it, that obligation still exists and penalties are still growing.
Is the Tax Still in Force
No, not for 2025 onward. Legislation passed in early 2026 wiped out the UHT for the 2025 calendar year and every subsequent year, so property held on December 31, 2025 or later triggers no return and no tax.1Canada Revenue Agency. How to Complete the Return and Calculate the Tax – Underused Housing Tax
The three earlier years are a different story. Anyone who was an affected owner on December 31, 2022, 2023, or 2024 was required to file a return by April 30 of the year following. Those obligations survived the repeal. Bill C-69, which received Royal Assent on June 20, 2024, changed some of the rules retroactively: it eliminated filing for certain Canadian owners, cut the minimum late-filing penalties, and added an employee-housing exemption.2Canada Revenue Agency. What Has Changed – Underused Housing Tax (UHT) The reduced penalties apply back to 2022, but the returns themselves are still owed.
Who Had to File for 2022 Through 2024
The UHT split property owners into two groups. Excluded owners had no filing obligation and owed no tax. Affected owners had to file a return for every residential property they held on December 31 of the relevant year, even when an exemption reduced the tax to zero.3Canada Revenue Agency. Underused Housing Tax
You were an excluded owner if you were a Canadian citizen or permanent resident who held the property in your own name (not through a trust or partnership), a publicly traded Canadian corporation listed on a designated Canadian stock exchange, a registered charity, or a government body. Cooperative housing corporations, hospitals, municipalities, public colleges, school authorities, universities, and trustees of qualifying trusts such as mutual fund trusts and REITs also fell outside the tax.4Canada Revenue Agency. Determine If You Are an Affected or Excluded Residential Property Owner
Everyone else was an affected owner. The typical cases were foreign nationals who were neither citizens nor permanent residents, corporations incorporated outside Canada, and private Canadian corporations where more than 10% of equity or voting rights were controlled by non-residents or foreign corporations.4Canada Revenue Agency. Determine If You Are an Affected or Excluded Residential Property Owner
Watch this next point carefully, because it caught many Canadians who assumed a foreign-buyer tax could not touch them. If you owned residential property as a trustee of a trust or a partner in a partnership, you had a filing obligation regardless of citizenship or residency.3Canada Revenue Agency. Underused Housing Tax Bill C-69 narrowed this for 2023 and 2024 by expanding which trusts and partnerships counted as excluded, but the trap was live for 2022 and still snared owners in later years.
Which Properties Were Covered
The tax applied to residential property in Canada containing no more than three dwelling units. That covered detached houses, semi-detached houses, rowhouse units, and residential condominium units, along with the associated land and common areas.5Canada Revenue Agency. Introduction to the Underused Housing Tax Buildings of four or more units under a single title were outside the definition, which is why large rental apartment buildings were never subject to the UHT.
Exemptions That Could Zero Out the Tax
Affected owners could claim exemptions on the return that eliminated the 1% amount owing. Filing the return was still mandatory. Skipping it because you were sure you owed nothing is the single most common reason people are now facing minimum penalties.
Primary Place of Residence
If you or your spouse or common-law partner used a dwelling unit in the property as your primary home for the calendar year, the property was exempt.6Canada Revenue Agency. Exemption for Primary Place of Residence
Qualifying Occupancy
A property was exempt if it was occupied for at least 180 days in the calendar year, with each stretch of occupancy lasting at least one continuous month. The occupant had to be either a tenant under a written agreement or someone with a qualifying relationship to the owner, such as a family member.
New Construction
A newly built home was exempt if construction was not substantially completed before April of the calendar year. If it still wasn’t substantially complete on December 31, no return was required at all for that year.7Canada Revenue Agency. Questions and Answers on the Underused Housing Tax
Uninhabitable Due to Renovation or Disaster
A property uninhabitable for at least 120 consecutive days because of renovation work (carried out without unreasonable delay) qualified for an exemption, but only once every 10 years for the same property. A separate exemption covered properties uninhabitable for at least 60 consecutive days because of a disaster or hazardous condition beyond the owner’s control, such as a fire, flood, earthquake, toxic spill, structural defect, or dangerous substance. That one could not be claimed for the same disaster in more than two calendar years total.8Canada Revenue Agency. Exemptions for Uninhabitable Residential Properties
How the Tax Was Calculated
The 1% rate applied to the property’s taxable value, defined as the greater of the local property tax assessment or the most recent sale price on or before December 31 of the calendar year. An owner who believed neither figure reflected the property’s actual worth could elect to use fair market value instead, supported by a professional appraisal. That election was made on the return itself.9Canada Revenue Agency. Calculating the Underused Housing Tax Payable
For co-owners, tax was proportional to each person’s ownership percentage. A 50% owner paid 1% on half the taxable value.
How to File a Late Return
Returns are filed on Form UHT-2900. An individual owner needs a Social Insurance Number, Individual Tax Number, or Temporary Tax Number. A corporation needs a Business Number with an RU program account identifier, which has to be registered with the CRA before filing.1Canada Revenue Agency. How to Complete the Return and Calculate the Tax – Underused Housing Tax
Individuals file through CRA My Account and corporations through My Business Account. Paper filing by mail is also accepted.10Canada Revenue Agency. File the Return – Underused Housing Tax The return asks for the property’s legal description, your ownership percentage, the taxable value, and any exemption you’re claiming.
The original deadline for both filing and payment was April 30 of the year after the calendar year. The 2024 return was due April 30, 2025. All three of the outstanding years are now past that date, so any return you file today is late by definition.11Canada Revenue Agency. When to File the Return and Pay the Tax
Penalties and Interest Still Accruing
The reason to act now, even though the tax itself is dead, is the minimum penalty structure. It applies whether or not you actually owed any tax. After Bill C-69, the minimums are $1,000 per property per year for individuals and $2,000 per property per year for corporations. Those reduced amounts replaced the original $5,000 and $10,000 minimums retroactively for 2022 and later.11Canada Revenue Agency. When to File the Return and Pay the Tax Penalties can run higher than the minimums the longer a return sits unfiled, or if the CRA concludes the failure was deliberate.
Interest on unpaid tax runs from the original April 30 due date. As of the second quarter of 2026, the CRA charges 7% on overdue UHT balances.12Canada Revenue Agency. Interest Rates for the Second Calendar Quarter The rate resets each quarter, and compounding since 2022 has done real work on any older balance.
Filing a late return, even one that claims an exemption and shows zero tax owing, stops the penalty from growing further. If you were an affected owner between 2022 and 2024 and never filed, the return is still owed, and getting it in is what limits the damage. The notice of assessment the CRA issues after processing is the official record, and it should be kept in case of later audit.