What is the UHT?
For your info, the Underused Housing Tax (UHT) is an annual federal 1% tax on the ownership of vacant or underused housing in Canada that took effect on January 1, 2022. The tax generally applies to non- resident Canadians and foreign nation owners of housing in Canada, although it may apply to some Canadian owners as well.
Filing Deadline for the UHT
For investors that own currently Canadian real estate investment properties, if you haven’t spoken with your accountant about the Underused Housing Tax, NOW is the time to do so. The filing deadline is October 31, 2023.
Navigating the UHT
It can be a complex issue and should not be taken lightly or one should not assume that they don’t need to file the returns.
Please note that you may not need to pay anything, but you may NEED to actually file a return for each Canadian property that you own.
Depending on the ownership structure, the fine amount per property can be significant if you do not file the UHT return by the due date. FYI, the stated penalties for not filing are $5,000 for individuals or $10,000 for corporations – even if no tax is payable.
Helpful link to navigating the tax
Helpful Questions About the UHT
Here are some of the basic questions that your accountant will be asking you to determine if you need to file a UHT return:
- Do you own Canadian investment residential rental properties with a spouse or another individual?
- Do you own any Canadian short term residential rental properties?
- Do you own any Canadian investment residential properties in or through a corporation or partnership?
- Do you hold any Canadian investment residential properties on behalf of others?
- Do you own each Canadian investment residential property in your own individual name?
In order to inform my clients and also for myself, I called my accountant at RHNCPA.com, to see if I needed to file returns for my own investment residential rental properties. We went through a series of questions to determine if I needed to file a UHT return, and it turns out that I do not need to file any returns.
I am not here to give any advice as I am not an accountant, but I can’t stress strongly enough that you need to ask your accountant to find out if this tax and or the filing thereof is applicable to you in order to avoid preventable stress and potential fines.
Resources
If you don’t have an accountant, I recommend connecting with one ASAP.
In addition to the embedded links above here is the contact info and link to Underused Housing Tax Technical information.
As a helpful resource, here are three recent articles that my accountants shared on the subject.
https://www.rhncpa.com/rental-properties-and-airbnbs-do-you-have-to-file-a-uht-return/
https://www.rhncpa.com/the-underused-housing-tax-uht-what-you-need-to-know/
https://www.rhncpa.com/underused-housing-tax-uht-rulings-for-strata-corporations/
