The federal government announced the new underused housing tax (UHT) as part of the 2021 federal budget which came into effect on Jan 1, 2022.
In a nutshell, the UHT is a one-percent tax on the value of non-resident, non-Canadian owned residential real estate that is considered to be vacant or underused.
The UHT rules include an annual return which is due April 30, along with the payment of any tax owing. For this first year of 2022 filings only, the deadline has been extended to October 31, 2023.
Because the UHT is so new, there is still a lot of confusion about how the rules apply.
Some of the common questions that we are receiving are – What is even considered residential real estate? What if I’m building a residential property with a partner to sell? What if I’m on title of my mom’s home for estate planning? What is the value used to compute the 1% tax? All great questions and Cahill CPA can help make sense of the new UHT rules.
There are a number of exemptions for UHT, the most common being individual Canadians who own property directly.
But that being said, you can’t just assume that the UHT only applies to non-residents and you don’t have to worry about it. If an individual holds residential property in a trust or corporation, you may be required to file or risk a $5,000 or higher penalty.
So if you have any questions or uncertainty at all, please reach out to Cahill CPA and we can help.