With housing affordability becoming a major concern in Canada, the federal government introduced the Underused Housing Tax (UHT) to discourage property vacancies and increase housing availability. This tax applies to certain property owners, including non-residents, corporations, and trustees. Understanding whether you need to file a UHT return, claim an exemption, or pay the tax is crucial to avoiding penalties. If you own property in Vancouver, Kamloops, Burnaby, Richmond, Surrey, or Metro Vancouver, this guide will help you navigate the requirements and ensure compliance.
What is the Underused Housing Tax (UHT)?
The UHT is a 1% annual tax imposed on underused or vacant residential properties across Canada. While it primarily affects non-resident, non-Canadian owners, some Canadian corporations, trustees, and partners are also required to file a return, even if no tax is owed. The goal of this tax is to improve housing accessibility by encouraging property owners to occupy or rent out their homes.
Who Needs to File a UHT Return?
Property owners fall into two categories: Excluded Owners and Affected Owners.
Excluded Owners (No Filing Required)
If you belong to any of the following groups, you are not required to file a UHT return or pay the tax:
- Canadian citizens or permanent residents who own residential property in their name.
- Publicly traded corporations listed on a Canadian stock exchange.
- Registered charities and cooperative housing corporations.
- Government organizations, municipalities, and public institutions.
Affected Owners (Filing Required, Even if No Tax Owed)
If you belong to any of the following categories, you must file Form UHT-2900 annually, even if you qualify for an exemption:
- Non-resident, non-Canadian individuals who own residential property in Canada.
- Private corporations (Canadian or foreign) that own residential properties.
- Trustees and partners (excluding certain designated Canadian trusts).
How to File the Underused Housing Tax Return (Form UHT-2900)
All affected owners must file Form UHT-2900 for each residential property they own as of December 31 of the tax year. If multiple owners hold the same property, each affected owner must submit a separate return.
Steps to File the UHT Return
- Obtain a Canadian Tax Identification Number – This can be a Social Insurance Number (SIN), Individual Tax Number (ITN), or Business Number (BN).
- Complete Form UHT-2900 – Include property details, ownership status, and exemptions.
- Submit the Form to the Canada Revenue Agency (CRA) by April 30 of the following year.
❗ Late Filing Penalties: Missing the April 30 deadline can result in steep fines:
- $5,000 minimum penalty for individuals.
- $10,000 minimum penalty for corporations.
Exemptions from Paying the UHT
Even if you are required to file a return, you may be exempt from paying the 1% tax under specific conditions:
- Primary Residence – If the home is occupied as the primary residence of the owner, their spouse, or their child attending a recognized educational institution.
- Qualifying Occupancy – If the property is rented to a tenant for at least 180 days in the tax year under a formal lease.
- Seasonal Inaccessibility – If the home is uninhabitable for part of the year due to seasonal conditions or lack of access.
- Natural Disaster or Hazard – If the property was damaged for at least 60 consecutive days due to a natural disaster.
- Recent Purchase – If you acquired the property in the tax year and did not own any other Canadian residential property in the past nine years.
To claim these exemptions, you must declare them on Form UHT-2900 when filing your return.
Why the Underused Housing Tax Matters for Property Owners in British Columbia
The UHT is part of Canada’s effort to make housing more accessible, particularly in high-demand areas like Vancouver, Kamloops, Burnaby, Richmond, Surrey, and Metro Vancouver. While its goal is to reduce vacancy rates, it also places an additional compliance burden on certain property owners.
If you are a non-resident property owner, private corporation, trustee, or real estate partner, ensuring compliance with the UHT is essential to avoid penalties and unnecessary tax liabilities.
Need Assistance with Your UHT Filing? Contact Lead Tax!
Filing the Underused Housing Tax Return can be complex, especially if you need to determine your filing obligations and claim exemptions. Our experienced tax professionals at Lead Tax can help property owners in Vancouver, Kamloops, Burnaby, Richmond, Surrey, and Metro Vancouver file accurately and minimize tax liabilities.
Contact us today for expert tax assistance and ensure full compliance with the CRA’s regulations.