Does the new Underused Housing Tax apply to you?

(NC) Taxes are a fact of life, but it’s understandable to have questions about any new tax you hear about. The Underused Housing Tax (UHT) is an annual federal one per cent tax which took effect in January 2022. The key question on most minds when you hear of a new tax is – will I have to pay it?

Well, it depends.

Unlike some municipal or provincial vacancy taxes, the UHT usually applies to foreign nationals, meaning non-Canadian citizens or non-permanent residents, who own vacant or underused residential property in Canada. The majority of Canadians who own residential property are excluded owners, which means they do not have to file a UHT return or pay the tax.

But overall, it’s usually a good idea to double check.

While Canadian owners are typically excluded, there are situations in which you could still be an affected owner, such as if you own residential property as a partner of a partnership or trustee of a trust.

It’s up to an individual to confirm if they are an affected or excluded owner. If you are excluded, you do not have to file a return.

If you are an affected owner, you may not have to actually pay the tax if you are eligible for an exemption, but you still have to file a UHT return by April 30, 2024 to avoid penalties and interest. Ultimately, it’s a good idea to check.

Note, even though the familiar annual income tax and benefit return is due on April 30th for most people, the UHT return is a separate return.

Find more information about this new tax and whether you’re affected at canada.ca/cra-uht.