Skip to content

UPDATE: November 21, 2023

  1. Filing was extended to April 30, 2024.
  2. The economic update has proposed the following:

Excluded owners – Expansion of the base of owners of residential property in Canada that are exempt from the UHT and the annual reporting obligations by making specified Canadian corporations, partners of a specified Canadian partnership, and trustees of a specified Canadian trust excluded owners, as well as by expanding the definitions of “excluded owner”, “specified Canadian partnership” and “specified Canadian trust” to include a broader range of Canadian ownership structures, effective for 2023 and subsequent calendar years.

Penalties – Reduction of the minimum failure to file penalties to $1,000 (from $5,000) per failure for individuals and to $2,000 (from $10,000) per failure for corporations, effective for 2022 and subsequent calendar years.

Employee accommodations – Introduction of a new UHT exemption for residential properties held as a place of residence or lodging for employees, effective for 2023 and subsequent calendar years. This exemption would apply for residential properties located anywhere in Canada other than in a population centre within either a census metropolitan area or a census agglomeration having 30,000 or more residents.

Technical changes – Introduction of additional technical changes to ensure the UHT applies in accordance with its policy intent and to ensure uniformity of tax statutes. These changes would include, for example, providing that unitized apartment buildings are not “residential property,” for UHT purposes, effective for 2022 and subsequent calendar years, and ensuring that the vacation property UHT exemption can be claimed by an individual or a spousal unit for only one residential property for a calendar year, effective for 2024 and subsequent calendar years.

EY. (December 13, 2023) Proposed amendments to the UHTA provide relief for taxpayers.

What this means is that all specified Canadian partnerships, corporations, and trust will no longer be required to file a UHT return for 2023. However, returns for 2022 are still required.


The Underused Housing Tax (UHT) was introduced last year aiming to penalize foreign investors in residential real estate in Canada. The UHT levies a 1% tax on the value of residential properties that are vacant or underused.

The deadline for filing the UHT return is April 30, 2024, to avoid the imposition of penalties and interest.

The rules require residential property owners (with some exceptions, as discussed below) to file an annual UHT return, even if only to claim an exemption from the tax. This means that even where there is no tax payable a return must be filed for each eligible property. Significant penalties apply if the UHT return is not filed on time.

Properties subject to UHT
Unless an exemption is available, the UHT applies to residential properties located in Canada including:

  • detached houses (containing up to three dwelling units),
  • semi-detached houses,
  • rowhouse units,
  • residential condominium units, or
  • any other similar premises intended to be owned as a separate unit or parcel.

Property owners that are excluded

An excluded owner is not subject to the UHT and is not required to file the annual UHT return. An excluded owner, which is not an affected owner, is one of the following:

  • An individual Canadian citizen or permanent resident of Canada
  • A publicly traded Canadian corporation
  • A person with title to the property in their capacity as trustees of various widely
    held trusts
  • A registered charity
  • A cooperative housing corporation
  • A municipal organization or other public institutions and government bodies.

All other owners, called affected owners, are required to file an annual return and pay the UHT unless they meet an available exemption. Specifically, all private corporations, partnerships, and trusts which own residential property in Canada, as well as individuals who are neither a Canadian citizen nor a permanent resident, are required to file an annual return to either claim an exemption from the tax or to determine the tax payable.

Available Exemptions:

Certain characteristics or uses of the property may exempt a residential property from UHT for a given calendar year. An annual return must be filed to claim the exemption. Exemptions include:

  • Primary place of residence: The residential property (or a dwelling unit within)
    is the primary place of residence for the owner, the owner’s spouse or common-
    law partner, or the owner’s child. Special rules apply to owners with multiple
  • Qualifying occupancy: The property was occupied for at least 180 days in the
    year, made up of one or more periods that are at least one month by:
    • A third party under a written rental agreement
    • A related person paying fair rent to the owner
    • The owner’s spouse or common-law partner in Canada under a work permit
    • The owner’s spouse, common-law partner, parent, or child who is a Canadian citizen or permanent resident
  • Limited seasonal access: The property was not suitable for year-round use as a place of residence or was inaccessible during part of the year.
  • Disaster or hazardous condition: The property was uninhabitable for at least 60 consecutive days in a calendar year due to disaster or hazardous conditions (limits apply to how many times an exemption can be claimed for the same disaster/condition).
  • Renovation or construction: The property was uninhabitable for at least 120 consecutive days in a calendar year due to renovation or where construction of the property was not substantially completed before April of the calendar year.
  • Construction of property for sale: The property was substantially completed after March of the year, was offered for sale to the public and was not previously occupied.
  • Year of acquisition: The property was first acquired by the owner during the year (by sale or transfer)
  • Upon death of owner: This exemption applies to the year in which the owner died as well as the following calendar year. It extends to the personal representative of a deceased individual as well as to surviving owners of jointly owned property of which the deceased owned at least 25 percent.
  • Specified Canadian corporation: The property was owned by a Canadian corporation with less than ten percent foreign ownership.
  • Partner of specified Canadian partnership: The property was owned by partners of a partnership where all members were either excluded owners or specified Canadian corporations.
  • Trustee of specified Canadian trust: The property was owned by a trustee of a trust where all beneficiaries with an interest in the property were either excluded owners or specified Canadian corporations.
  • Prescribed area: The property was located in a prescribed area based on census data and the owner, spouse, or common-law partner resided in the property for at least 28 days in the calendar year.

How is the UHT calculated?

The UHT payable is calculated as one percent of the property value multiplied by the applicable ownership percentage.

The property value is the greater of (i) the assessed value for the year for property tax purposes, and (ii) the most recent sale price on or before December 31 of the calendar year. Owners can also make an election to use the fair market value where a written appraisal is obtained to support the value.

What else do I need to know?

A sale or transfer by a non-resident person of property located in Canada gives rise to specific tax and reporting requirements, including requesting a certificate of compliance from the CRA under section 116 of the Income Tax Act.


The spirit of the UHT is to penalize foreign investors in residential real estate. If you are an excluded owner you are not subject to the UHT and not required to file an annual return.

That being said, the UHT is new and on the surface seems complex. Please contact us with any questions you might have.

Client Login

Forgot your password?

Remember this computer