Underused Housing Tax

The Underused Housing Tax (UHT) is a federal annual tax on the ownership of certain residential properties in Canada that are considered vacant or underused. It is imposed under the Underused Housing Tax Act and administered by the Canada Revenue Agency (CRA). The tax generally targets owners who are not Canadian citizens, not permanent residents, and not otherwise “excluded owners” — most commonly non-resident individuals, along with some corporations and trusts that hold residential property in Canada.

Who has to file and pay

The obligation has two parts: filing a return and paying any tax owing. For most affected owners, a UHT return must be filed for each affected property by April 30 of the following calendar year, even when no tax is payable. A minimum penalty can apply for failing to file, and interest can accrue on unpaid amounts.

Whether tax is actually owed depends on the property’s use (occupied, vacant, or underused) and on the exemptions that apply to the owner. Because the rules are updated from time to time, the current rate, filing deadlines, and eligible exemptions should be confirmed on the CRA website.

Exemptions and how the tax is calculated

The tax is calculated as a percentage of the property’s taxable value, which is generally based on the greater of the property’s assessed value or its most recent sale price, as set out in the Act and CRA guidance. Exemptions can reduce or eliminate the tax, for example:

• Occupancy exemptions, where the property serves as a principal residence for the owner or a qualifying occupant for a required period.
• Exemptions tied to specific owner types, property locations, or circumstances such as a recent purchase or a property that cannot reasonably be occupied.
• “Excluded owner” status, which places certain owners — such as Canadian citizens and permanent residents who hold property as individuals — outside the tax and the filing requirement entirely.

Why it matters

For non-resident owners of Canadian residential real estate, the UHT is an annual carrying cost separate from municipal property tax and from municipal vacant home tax or provincial levies such as the non-resident speculation tax. A unit left vacant or lightly used can trigger a recurring federal charge on top of mortgage payments, insurance, and condo fees.

For buyers, that changes the economics of a purchase and can factor into how affordability is assessed. Sellers and their representatives may also need to confirm the filing history for a property, since the tax attaches to ownership rather than to the mortgage itself.