The Underused Housing Tax: Do You Need to File a Return?

The Federal Government’s new Underused Housing Tax (the “UHT”) came into effect on January 01, 2022 and, as a result, owners of vacant properties anywhere in Canada may be liable for the new tax. Whether subject to this new tax or not, all affected owners must file their 2022 UHT tax returns (Form UHT-2900) by April 30, 2023, including each joint owner of a single property.

The UHT applies to individuals, corporations, partnerships, and trusts, and failing to file a UHT return on time may result in significant penalties.  Potential penalties range from a minimum of $5,000 per filing for individuals and a $10,000 minimum penalty per filing for corporations, partnerships, and trusts.[1]

However, notwithstanding that the prescribed deadline is April 30 of the following calendar year, on March 27, 2023, the CRA announced that, due to the unique challenges for affected owners in the first year of UHT administration, the Minister of National Revenue will waive interest and penalty fees relating to any UHT returns and remittance that are filed and paid by October 31, 2023. This waiver will only apply to UHT returns for the 2022 calendar year.

How Much is the UHT:

The UHT is calculated as a one percent annual tax on the value of the underused residential real estate.

Properties Affected by the UHT:

Under the Underused Housing Tax Act (the “Act”), residential property includes any property situated in Canada that is:

  • a detached house or similar building containing no more than three dwelling units and the adjacent land that is necessary to use and enjoy the residence (including cabins, cottages, and chalets); or
  • a semi-detached house, row house units, residential condominium units and other similar premises that are intended to be a separate parcel, intended to be owned or other division of real property (this includes coach houses or laneway houses).[2]

Dwelling units are defined as any “residential unit that contains private kitchen facilities, a private bath and a private living area.”

Who is Affected by the UHT:

The Act classifies residential property owners into two categories, excluded owners and affected owners. Excluded owners of residential properties in Canada have no obligations or liabilities for the UHT. Any residential property owner who falls outside the umbrella of excluded ownership is an affected owner and must file a UHT return, even if they claim an exemption (see discussed below).


A residential property owner is the person named as an owner on the title registered with the land registry in a given province (the Land Titles Office in BC). The definition of owner also includes a person who:

  • is a life tenant of a residential property;
  • is a holder of a lifelong lease in respect of a residential property; or
  • has a long-term lease (at least 20 years) or has continuous possession of the land where the residential property is situated.

Excluded Owners

An excluded owner of residential property is an owner who, on December 31 of the calendar year, is:

  • an individual who is a Canadian citizen or permanent resident;
  • a Canadian publicly traded corporation;
  • an owner of residential property acting as a trustee of certain widely held trusts;[3]
  • a registered charity;
  • a cooperative housing corporation; and
  • certain public institutions and government bodies.[4]

Affected Owners

Outside of those defined categories, all other owners are classified as affected owners, are subject to the UHT, and are required to file a return for every calendar year. As a result, all owners of residential property who are not in the class of excluded owners listed above must file a UHT return for each residential property they own.

Consequently, all non-Canadian residents, non-permanent residents, private corporations, partners in a partnership, trusts and trustees, that legally own residential property in Canada are classified as affected owners and must file UHT returns and remit any UHT owing to the CRA before the prescribed deadline.

Qualifying Exemptions:

For those who qualify as affected owners, the Act provides several exemptions from UHT liability. However, to claim an exemption, affected owners must file a UHT return on time. Subsections 6(7)-(9) of the Act list the following exemptions to the UHT:

Exemptions based on the type of owner:

No UHT is payable where the owner falls into one of the following categories:

  • Specified Canadian corporations – If the residential property is owned by a corporation with less than 10 per cent foreign ownership;
  • Partner of specified Canadian partnership – If all members of the partnership are either excluded owners or specified Canadian corporations;
  • Trustee of a specified Canadian Trust – The property was owned by a trustee of a trust where all the beneficiaries with an interest in the property were either excluded owners or specified Canadian Corporations;
  • Where the owner dies – If the owner dies in a calendar year, no UHT is payable for that or the following calendar year. If the deceased was a joint owner of the property and owned a 25 per cent interest or more, the surviving joint owners will also be exempt from the UHT for the same period.

Exemptions based on the occupant:

Primary Place of Residence (Individuals Only)

No UHT is payable where the residential property is the principal residence of the owner, their spouse or their common-law partner. Additionally, if the owner’s child, spouse or common-law partner occupies the property while studying at an authorized college or university, the affected owner will be exempt.[5]

Qualifying Occupancy Period

An affected owner of a residential property will not be subject to the UHT where the property has been occupied for at least 180 days in the calendar year (made up of periods of one month or more) and is occupied by one of the following persons:

  • a person unrelated to the owner subject to a tenancy agreement;
  • a person related to the owner who is paying fair rent to occupy the property;
  • the owner’s spouse, common-law partner, parent, or child who is a Canadian citizen or permanent resident; or,
  • the owner’s non-resident spouse or common-law partner who is in Canada under a valid work permit.[6]

Exemptions based on the availability of the property:

No UHT is payable if the residential property is:

  • not suitable for use as a residence year-round;
  • is seasonally inaccessible because public access is not maintained throughout the year;
  • is uninhabited for at least 60 days out of the calendar year due to a disaster or other circumstances outside of the owner (this exemption can only be claimed for one calendar year per disaster or hazardous condition); or
  • is uninhabitable for at least 120 consecutive days in a calendar year due to renovations (this exemption can only be claimed once every 10 years).

Additionally, UHT will not apply to residential properties where construction of the residence is substantially completed (90 per cent or more) after March of the calendar year and offered for sale to the public or is not substantially completed before April of the calendar year.

Exemptions based on location:

Affected owners can claim an exemption on properties located in “prescribed areas” or what the Government of Canada’s website describes as “vacation properties.” In addition to being located in a prescribed area, the owner or their spouse or common-law partner must reside at the property for at least 28 days in the calendar year.

The Canada Revenue Agency has released a property designation tool to assist owners in determining whether their residential properties are located within a prescribed area.

Important Filing Considerations

It is worth reiterating that all affected owners must file an annual UHT return even if they qualify for an exemption. The penalties for non-compliance are severe, and a failure to file by the April 30 deadline can result in an owner being required to pay increased penalties. Beyond the minimum $5,000 non-compliance penalty for individuals and $10,000 penalty for owners that are not individuals, additional penalties and interest will apply to outstanding taxes not paid by April 30 following each reporting year. While affected owners will have until October 31, 2023 to file and pay UHT for the 2022 calendar year, beginning in 2024, the deadline for the UHT will return to April 30.

For more information, please contact Shaun Campbell at [email protected] or Kyle Ramsey at [email protected].

This is provided as information ONLY; it should NOT be construed as legal advice. You should consult with a lawyer to provide you with specific advice for your own situation.


[1] Underused Housing Tax Act, s. 47,

[2] Underused Housing Tax Act, s. 2,

[3] These include mutual fund trusts, REITs, and SIFT trusts.

[4] Including municipalities, hospital authorities, public colleges and universities, and Indigenous governing bodies.

[5] Underused Housing Tax Act, s. 8,

[6] Underused Housing Tax Act, s. 6(1) & (9),

The content made available on this website has been provided solely for general informational purposes as of the date published and should NOT be treated as or relied upon as legal advice. It is not to be construed as a representation, warranty, or guarantee, and may not be accurate, current, complete, or fit for a particular purpose or circumstance. If you are seeking legal advice, a professional at Pushor Mitchell LLP would be pleased to assist you in resolving your legal concerns in the context of your particular circumstances.

It is prohibited to reproduce, modify, republish, or in any way use content from this website without express written permission from the Chief Operating Officer or the Managing Partner at Pushor Mitchell LLP. Third party content that references this publication is not endorsed by Pushor Mitchell LLP and in no way represents the views of the firm. We do not guarantee the accuracy of, nor accept responsibility for the content of any source that may link, quote, or reference this publication.

Please read and understand our full Website Terms of Use and Disclaimer here.

Legal Alert, Pushor Mitchell’s free monthly e-newsletter