It can be overwhelming to keep up with all the tax laws and determine which ones apply to you. 

Update March 28, 2023

Since the release of this article, it was announced the Minister of National Revenue is providing transitional relief to affected owners to provide more time.

The deadline for filing the UHT return and paying the UHT payable is still 2023: no penalties or interest will be applied for UHT returns and payments that the CRA receives before November 1, 2023.

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Update November 30, 2023

During the 2023 Fall Economic Statement the Government announced that it intended to change the below definitions to exempt a number of entities potentially caught by the UHT. Read about the updates here: What Are the Proposed Changes to New Underused Housing Tax? (

Update: New UHT Online Assessment tool

One new tax that some Canadians may not be aware of is the Underused Housing Tax or UHT. This little-known piece of legislation affects a variety of homeowners across Canada, so it’s important to know exactly what this tax is and when it applies. In this post, we’ll discuss what you need to understand about UHT to accurately file your taxes -whether or not you own an underutilized housing property.

For non-Canadians, we also have an article about the impact that this tax has on under-utilized or vacant housing may have on you and anyone that co-owns that property. 

What is Underused Housing Tax?

UHT is a tax on vacant or underused property that came into effect on January 1, 2022. The tax is 1% of the property’s value and is calculated on December 31 of each year of ownership.

How do you calculate the property’s value?

The UHT is 1% of the greater of the assessed property value for the year, and the most recent sale price times the owner’s percentage of ownership. The owner may also use the property’s fair market value as determined at any time during the year and up to April 30 of the following year[1].

Why is there an Underused Housing Tax?

This is, presumably, an effort to cool Canada’s excessively hot real-estate market. A housing affordability crisis is unfolding in Canada that relates, at least in part, to foreign buyers or local speculators buying and holding real estate to realize a gain on the home’s value. The presumption goes that this limits the amount, and therefore drives up the price, of real estate in Canada by increasing the scarcity of real estate. This tax is meant to discourage this activity.

Is this the same as my province or municipality’s vacancy tax?

No, it is not. This federal tax is separate from municipal and provincial vacancy taxes.

Who must file an Underused Housing Tax return?

The government’s language indicated that this would target non-residents of Canada. However, it certainly applies to a wider variety of individuals, corporations, trusts and partnerships that are residents in Canada. The primary test to consider is who is on the property’s title on December 31 of the previous year; they are the ones who need to be concerned about the UHT. 

Every person who is not an Excluded Owner must file a UHT-2900 return annually. The legislation is drafted to ‘exclude’ people from having to pay it rather than including them.

An Excluded Owner generally includes, but is not limited to:[2]

  • an individual who is a Canadian citizen or permanent resident – unless included in the list of affected owners below
  • any person – including an individual who is a Canadian citizen or permanent resident – that owns a residential property as a trustee of a mutual fund trust, real estate investment trust, or specified investment flow-through trust (SIFT) for Canadian income tax purposes
  • a Canadian corporation whose shares are listed on a Canadian stock exchange designated for Canadian income tax purposes[3]
  • a registered charity for Canadian income tax purposes
  • a cooperative housing corporation for Canadian GST/HST purposes
  • an Indigenous governing body or a corporation wholly owned by an Indigenous governing body

If you are not an Excluded Owner, you are an Effected Owner, which is generally everybody else, including but not limited to:[4]

  • an individual who is not a Canadian citizen or permanent resident
  • an individual who is a Canadian citizen or permanent resident and who owns a residential property as a trustee of a trust (other than as a personal representative of a deceased individual)
  • any person – including an individual who is a Canadian citizen or permanent resident – that owns a residential property as a partner in a partnership
  • a corporation that is incorporated outside of Canada
  • a Canadian corporation whose shares are not listed on a Canadian stock exchange designated for Canadian income tax purposes
  • a Canadian corporation without share capital

Who is exempt from calculating and paying the Underused Housing Tax (but still has to file?)[5]

1. Type of owner

a) Specified Canadian Corporation foreign owners do not own or control, directly or indirectly, 10% or more of the corporation

b) Specified Canadian Partnership where each member is (on December 31) an Excluded Owner or Specified Canadian Corporation

c) Specified Canadian trust where each beneficiary that has a beneficial interest in the property is (on December 31) an Excluded Owner or Specified Canadian Corporation

d) New Owner acquired the property in the year and was not an owner at any time in the prior 9-years.

e) Owner Died in the year or prior year

f) The Personal Representative of a deceased individual that died in the year or prior year, and the person was not an owner of the property in either of the years

g) A Co-Owner of the property where another co-owner held at least 25% of the property at their death in their year of death and the subsequent year.

2. Availability of the property

a) If the property is under construction and not substantially completed by April 1 of the year

b) If the construction was completed between January 1 and March 31 of the year and the property was put for sale to the public during the year, and the property was never occupied by an individual as a place of residence during the year

c) The property is not appropriate to be lived in year-round or seasonable accessibility is limited due to public access not being maintained year-round

d) The property is uninhabitable for at least 60 consecutive days due to a disaster or hazardous conditions (only available for a maximum of two years)

f) The Property is uninhabitable for at least 120 consecutive days due to ongoing major renovations (only available once every ten years).

3. Occupancy of the property

a) The property is the primary residence of the individual, their spouse or common-law partner, or their child attending a designated learning institution

Note that the word ‘primary’ is not the same as ‘principal’ for income tax purposes. The CRA states that their guidelines and criteria under the GST/HST rules will determine whether an individual’s residence is their primary place of residence for the UHT.

b) The property is continuously occupied for at least one month and 180 days in total by one of the following individuals:

  • An arm’s length individual who occupies the property under a written agreement
  • A non-arm’s length individual who occupies the property under a written agreement and pays at least fair rent
  • The owner or their spouse or common-law partner, while the individual is in Canada for work and the occupancy relates to that purpose.
  • The owner, their spouse or common-law partner, parent or child who is a Canadian citizen or permanent resident

Note that physical occupancy isn’t necessarily required so much as the right to occupy the property throughout their physical absence and the right to occupy the property isn’t granted to someone else during this time.

c) The location and use of the property

  • The property is a vacation property located in an eligible area[6] of Canada and used by the owner or their spouse for at least 28 days in the year.

How do you report the Underused Housing Tax?

The UHT is reported using the standalone return called the Underused Housing Tax Return and Election form, or UHT-2900. A separate UHT-2900 is required for each property owned by the taxpayer to which the tax applies.

When do you have to report the Underused Housing Tax?

UHT-2900 is due by April 30 of the year following the year in which the tax was applied.

What happens if you do not file the return?

Individual owners who fail to file the return on time will face a minimum penalty of $5,000.

Corporate owners who fail to file the return on time will face a minimum penalty of $10,000.

Other penalties may apply, including loss of access to the exemptions (not usable for a full year, uninhabitable, primary residence, and qualifying occupancy) if the return is not filed by December 31 of the following year.

There is no limitation period for the CRA to assess tax, penalties, and interest under the UHT regime if a return is not filed.

How do I file the Underused Housing Tax return?

As of February 22, 2023, you can either paper file the return or use CRA’s online filing portal found here: Ready to file (


Surprising scenarios that require the owner to file a UHT return?

  • Nearly all Canadian corporations that own residential real estate
  • Individuals holding residential property used to earn income in a partnership (including married couples who own an Airbnb and/or residential rental properties). A partnership doesn’t need to be formalized with a written agreement. The existence of a partnership is based on facts and generally exists where:
    • two or more owners are:

      • carrying on business;

      • in common;
      • with a view to profit.

Married couples and other owners who own a residential property with no aim to make a profit from it are likely ‘co-owners’ rather than ‘partners’ and may qualify as excluded owners. Care should be given concerning how the owners reported such properties on their income tax returns. If they are not consistent, amendments may be required.

  • Owners who sold their house last year but are still on the title on December 31 because land registries haven’t caught up to the transaction yet.
  • Trustees of trusts holding residential real property, which could include:
    • A family cottage/vacation property held in a family trust
    • Join ownership created for probate or estate planning purposes, in some cases
    • Parents who co-sign on their children’s mortgage, in some cases
  • Canadian private companies that operate out of a residential building, in some cases

Foreign owners selling property in Canada: interplay with section 116 Compliance Certificates

As part of the CRA’s enforcement plans for the UHT, non-residents disposing of Canadian residential property that apply for a compliance certificate will now prompt a compliance review by the CRA in relation to the UHT beginning in 2023. The CRA may check to see if the non-resident had filed all required UHT returns regarding the property and potentially review if the non-resident applicant was eligible for any exemptions claimed under the UHT or if any outstanding UHT taxes have been paid. The CRA will not issue these compliance certificates until all UHT compliance has been addressed.

Both buyers (and the non-resident sellers) and their advisors, realtors, lawyers and accountants should be keenly aware of this issue, especially given the large amounts of tax, penalties and interest that could apply for the withholding required of the purchaser and their advisors, should the non-resident not remit the appropriate security to CRA for the potential tax on any gain from the sale.[8]

Where can you find more information about the Underused Housing Tax?

Try our Underused Housing Tax evaluation tool to determine if you are subject to the new UHT and reporting


Fill out the Checklist


Feel free to contact us if you have questions about UHT and how it may affect you.




[1] The CRA requires a formal appraisal using specific metrics.

[2] Source: Underused Housing Tax –

[3] Important note: Canadian private corporations and Canadian Controlled Private Corporations are not excluded owners for the UHT

[4] Source: Underused Housing Tax –

[5] Note that if the owner is not an Excluded Owner, a UHT-2900 return must still be filed; regardless of it, tax is payable. In this way, it becomes more of an information form to provide the government with details about the property and why the taxpayer believes they are exempt from the UHT

[6] Underused housing tax vacation property designation tool (

[7] Underused Housing Tax Return and Election Form (

[8] Disposing of or acquiring certain Canadian property –