Underused Housing Tax (UHT)

The Canada Revenue Agency describes the UHT as "an annual federal 1% tax on the ownership of vacant or underused housing in Canada that took effect on January 1, 2022." It "generally applies to foreign national owners of housing in Canada", although some Canadian owners, "such as certain partners, trustees, and corporations", can also be affected. A foreign national is an individual who is not a Canadian citizen or permanent resident.

Ownership was tested on December 31 of each calendar year. An "affected owner" of a residential property had to file a separate return for each property, and each co-owner who was an affected owner filed their own. Since the 2023 calendar year, the CRA states, "the majority of Canadian owners of residential property do not have to file a return or pay the tax."

The tax equals the property's value × 1% × the owner's ownership percentage. The value is generally the "taxable value": the greater of the assessed value set by the property tax assessment authority and the most recent sale price on or before December 31. Owners could elect to use an appraised fair market value instead.

The UHT is separate from provincial and municipal vacancy taxes such as the B.C. speculation and vacancy tax or Hamilton's Vacant Unit Tax.

All of Canada. For UHT purposes, residential property generally means "A detached house or similar building that contains a maximum of 3 dwelling units, including the related land" or "A semi-detached house, rowhouse unit, or condominium, including the related land." From 2022, a condominium unit is not residential property if it is in a building with at least 4 condominium units, the owner holds at least 90% of them, and at least 90% of those units are used for continuous occupancy of at least one month.

For 2022 to 2024, the CRA separates excluded owners, who do not file or pay, from affected owners, who must file even when they claim an exemption. The CRA states: "Generally, Canadian owners of residential property are excluded owners." The Bill C-69 amendments (Royal Assent June 20, 2024) added more Canadian owners to the definition of excluded owner starting with the 2023 calendar year.

On the return, affected owners could claim an "Exemption for primary place of residence" (Part 4, only for owners who are individuals), an "Exemption for qualifying occupancy" (Part 5), or one exemption from a list of "Other exemptions" (Part 6). From 2023, the CRA lists an added exemption category for employee accommodations. A non-citizen, non-permanent-resident owner who, with a spouse or common-law partner, owns several residential properties must designate one property in Part 3 to claim the primary residence or qualifying occupancy exemption.

From 2025, no exemption is needed: no tax is payable and no return is required for any owner.

Affected owners file one UHT return (Form UHT-2900) per residential property, and one per ownership capacity where the owner is a partner or trustee. The CRA's "File the return" page lists where to send it. The CRA states that "Affected owners that filed a UHT return for the 2025 calendar year before this legislative change will be contacted by letter about the cancellation of their returns."

For 2022 to 2024, the tax was due on the same date as the return: April 30 of the following calendar year. The CRA states that interest is charged on amounts owed that are not received when due, at its prescribed interest rates. The CRA's prescribed annual interest rate on overdue Underused Housing Tax amounts is 7% for October 1 to December 31, 2026; rates are set each quarter. Nothing is payable for 2025 and later years.

For late returns for 2022, 2023 and 2024, the CRA lists a minimum penalty of $1,000 for an individual and $2,000 for a corporation. The Bill C-69 amendments reduced "The original minimum penalty for individuals and corporations" starting with the 2022 calendar year. The CRA warns that an affected owner who claims certain exemptions and does not file by December 31 of the following calendar year faces an adjusted penalty calculation "that could result in higher penalties" (tax notice UHTN3). The CRA states that existing penalty and interest provisions for 2022 to 2024 "remain in effect."

Budget 2025 was tabled on November 4, 2025, with a Notice of Ways and Means Motion to eliminate the UHT for 2025 and later years. Bill C-15, the Budget 2025 Implementation Act, No. 1, received Royal Assent on March 26, 2026 as Statutes of Canada 2026, c. 3. Division 2 of Part 3 added section 1.1 (no tax payable for 2025 and later years) and section 6.1 (no return required for 2025 and later years) to the Underused Housing Tax Act. It also repeals the Underused Housing Tax Act and the Underused Housing Tax Regulations, with both repeals coming into force on January 1, 2035. Earlier, Bill C-69 (Royal Assent June 20, 2024) reduced minimum penalties and expanded the excluded-owner categories.