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As part of the 2022 Federal Budget released in April 2022, the Department of Finance introduced a new tax on vacant or underused residential property in Canada. This new Underused Housing Tax (UHT) became effective on January 1, 2022 and the first UHT payments and UHT returns for the 2022 tax year will be due on April 30, 2023.

Generally, the underused housing tax is payable by non-resident or non-Canadian owners of vacant or underused housing in Canada. There are, however, scenarios where certain Canadian owners may be required to pay the UHT, or be required to file the UHT return for the year in order to claim an exemption to the UHT tax that would otherwise apply.

If you are an owner of residential property in Canada on December 31, 2022, either personally, through a corporation or partnership, or as the trustee of a trust, the following important details of the new UHT rules should be considered in determining whether you may have a UHT payment or filing requirement starting with the 2022 tax year.


UPDATE March 27, 2023 – The CRA has announced that they will waive interest and penalties for late filed UHT returns for 2022. Although the deadline for filing the UHT return and paying the UHT payable is still April 30, 2023, no penalties or interest will be applied for UHT returns and payments that the CRA receives before November 1, 2023. Visit the CRA Release from March 27, 2023 for more information on this policy.

The CRA has also now released a Frequently Asked Questions page (UHTN15- Questions and Answers About the Under Used Housing Tax) with some comments about specific Underused Housing Tax topics and scenarios. The CRA has indicated that this page will also be updated at a later time with additional questions and answers on UHT. Visit the CRA Underused Housing Tax Notices webpage for more details.


Who is Required to File the UHT Return?


You have to file a return, form UHT-2900 Underused Housing Tax Return and Election Form, for each of your properties in Canada for which all of the following conditions are met on December 31 of a calendar year:

  • the property is a residential property

  • you are an owner of the residential property

  • you are not an excluded owner of the residential property (see the following section for details on “Excluded Owners”)


Generally, residential property is defined as property that is either of the following:

  • a detached house or similar building that contains not more than three dwelling units, along with any appurtenances and the related land

  • a semi-detached house, rowhouse unit, residential condominium unit or other similar premises, along with any common areas, appurtenances and the related land


The following are examples of buildings, premises and structures that are not residential properties for purposes of the underused housing tax:

  • quadruplexes (buildings that have four dwelling units)

  • high-rise apartment buildings

  • buildings that are primarily (more than 50%) for retail or office use and that contain an apartment

  • commercial condominium units

  • boarding houses and lodging houses

  • commercial cottages, cabins and chalets (that is, those that are used by the operator of an establishment to provide lodging to several unrelated business or leisure travelers at once in separate cottages, cabins or chalets)

  • hotels, motels, inns, and bed and breakfasts

  • floating homes

  • mobile homes

  • park model trailers

  • travel trailers, motor homes and camping trailers


Who is an Excluded Owner?


Excluded owners are Canadian persons that do not have to file a return or pay the underused housing tax. You are an excluded owner of a residential property if you are any of the following:

  • the government of Canada or a province, or an agent of the government of Canada or a province

  • an owner of the residential property as a trustee of any of a mutual fund trust, real-estate investment trust, or specified investment flow-through trust (SIFT) for Canadian tax purposes

  • an individual who is a citizen or permanent resident of Canada, unless you are an owner of the residential property as either of the following:

    • a trustee of a trust (except if you are the personal representative of a deceased individual, in which case you are an excluded owner of the residential property)

    • a partner of a partnership

  • a corporation that is incorporated under the laws of Canada or a province whose shares are listed on a Canadian stock exchange designated for Canadian income tax purposes

  • a registered charity for Canadian income tax purposes

  • a cooperative housing corporation, hospital authority, municipality, public college, school authority or university as defined under the Income Tax Act

  • a para-municipal organization as defined under the Excise Tax Act

  • an Indigenous governing body as defined in section 2 of the Department of Indigenous Services Act or a corporation wholly owned by such a body


It is important to note that the above list of excluded owners does not include Canadian Controlled Private Corporations (CCPC), which will mean that any CCPC that owned residential property in 2022 will not be considered an excluded owner and will have a UHT filing requirement for the 2022 tax year.


Who is Required to Pay UHT?


Owners of residential property in Canada who are not considered Excluded Owners for the year will be required to file a UHT return. Any person who is required to file the UHT return, will also have to pay the UHT tax, unless one of the following specific exemptions to the tax applies to the ownership of the property for the year.


Your ownership of a residential property may be exempt if you are any of the following:

  • a specified Canadian corporation (less than 10% control by foreign owners)

  • a partner of a specified Canadian partnership (each member is an excluded owner)

  • a trustee of a specified Canadian trust (each beneficiary is an excluded owner)

  • a new owner

  • a deceased individual, or their personal representative or co-owner


Where certain conditions are met, your ownership of a residential property may also be exempt from the underused housing tax if the property is any of the following:

  • a vacation property that is located in an eligible area of Canada

  • used as a primary place of residence or for qualifying occupancy

  • not suitable for year-round use

  • seasonally inaccessible

  • uninhabitable during the calendar year

  • newly constructed


How is the UHT Calculated?


The tax rate of the underused housing tax is 1%. Generally, to calculate the underused housing tax payable, each affected owner of a residential property has to apply the 1% tax rate to the value of the residential property and then apply their respective ownership percentage of the residential property.

The value of the property for the purposes of calculating the UHT is determined based on the greater of the property tax assessment value for the year, or the most recent sale price of the property on or before December 31 of the calendar year.

For more details on how the UHT is calculated, visit the CRA notice on Calculating the Underused Housing Tax Payable.


When is the UHT Return Due, and Are There Penalties for Late Filing?


Both the UHT return and payment of any UHT taxes for the year are due by April 30th of the following year (i.e. 2022 UHT is due by April 30, 2023).

If you fail to file your return for a residential property for a calendar year by April 30 of the following calendar year, you have to pay a penalty that is the greater of the two following amounts:

  • $5,000 for affected owners who are individuals or $10,000 for affected owners that are not individuals (such as corporations)

  • the amount that is the total of the following:

    • 5% of your underused housing tax payable for the residential property for the calendar year

    • 3% of your underused housing tax payable for the residential property for the calendar year multiplied by the number of complete calendar months that the return is past due

In some cases, where certain exemptions are being claimed, even greater penalties can apply if you fail to file your return for a residential property for a calendar year by December 31 of the following calendar year.

For more details on the applicable UHT late filing penalties, visit the CRA notice on Filing a Return and Paying the Underused Housing Tax.


What Are Some Specific Scenarios Where a Canadian Citizen/Resident May Be Required to File a UHT Return?

The following are some specific scenarios that will create a UHT filing requirement for the year, even where the owners of the residential property are Canadian citizens/residents:

Scenario 1 - Residential property owned by a Canadian resident corporation, trust, or partnership.

Scenario 2 - Land owned by a Canadian corporation, trust, or partnership, on which a personally owned or personally funded residence is located.

Scenario 3 - Residential property owned by Canadian citizen/permanent resident individuals (including in joint title), but where there is an agreement in place indicating a different beneficial ownership of the property than as shown on title (the most common example of this is where a child, or other person has been added on title for estate planning purposes only).


Where Can I Find More Details About the UHT?


The Canada Revenue Agency has a homepage for Underused housing tax technical information which contains lots of helpful tools and information about the UHT, including UHT technical notices, links to the relevant UHT forms, and other tools for determining whether you have a UHT payment or filing requirement.


For help in determining your UHT filing requirements, or filing your UHT returns, contact Gregory Harriman & Associates LLP by email at This email address is being protected from spambots. You need JavaScript enabled to view it. or by phone at 1-403-934-3176.



The information in this publication is current as of April 5, 2023.

This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact Gregory, Harriman & Associates LLP to discuss these matters in the context of your particular circumstances. Gregory, Harriman & Associates LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.