Underused Housing Tax (UHT) in Canada: A Guide for Property Owners

What-Canadians-Need-to-Know-About-Underused-Housing-Tax

Ever heard of the Underused Housing Tax (UHT) in Canada? It’s a new thing that encourages property owners to rent out or sell their homes. Wondering if it affects you? Let’s break it down.

If you own a residential property in Canada, you may have heard of the Underused Housing Tax (UHT) that was introduced in January 2022. The UHT is a tax that applies to properties that are not occupied or rented for at least six months of the year. The purpose of the UHT is to encourage property owners to make their homes available for rent or sale, and to increase the supply of affordable housing in Canada.

But what does the UHT mean for you? How do you know if you need to file a UHT return? And how can you avoid paying penalties for late filing?

In this blog post, we will answer these questions and more. We will also provide you with a handy checklist of the documents and information you need to file your UHT return accurately and on time.

Who needs to file a UHT return?

If your name is listed on the title of a residential property, you may be required to file a UHT return. This includes properties that are:

  • Single-family homes
  • Condominiums
  • Apartments
  • Townhouses
  • Cottages
  • Vacation homes

However, not all properties are subject to the UHT. There are several exemptions that may apply to you, such as:

  • You live in the property as your principal residence for at least six months of the year
  • You rent out the property for at least six months of the year, in periods of 30 days or more
  • You are undergoing major renovations or repairs on the property
  • You are unable to occupy or rent out the property due to legal or regulatory restrictions
  • You are a member of the armed forces or a diplomat who is temporarily stationed outside Canada

To find out if you qualify for any of these exemptions, you can use the CRA self-assessment tool. This tool will help you determine if you need to file a UHT return, and how much tax you may owe.

When do you need to file a UHT return?

The deadline for filing your UHT return for the 2022 calendar year has been extended to October 31, 2023. This means that you have until then to report your property status and usage for the entire year of 2022.

If you fail to file your UHT return on time, you may face penalties. For individuals, the penalty for late filing is $5,000. For corporations, the penalty for late filing is $10,000. You may also be charged interest on any unpaid tax.

How do you file a UHT return?

Filing your UHT return is now easier than ever. You can file online using the CRA My Account service. All you need is your social insurance number (SIN), date of birth, and postal code.

To file your UHT return online, you will need to provide the following information:

  • The address and legal description of your property
  • The percentage of ownership by yourself and any other owners
  • The percentage of ownership by any immediate relatives who are Canadian residents
  • The usage details for your property for each month of 2022
  • The amount of tax you owe, or the exemption you claim

You will also need to upload some supporting documents, such as:

  • A PDF copy of the lawyers’ Title Transfer document
  • A PDF copy of the property tax settlement for the most recent year
  • A PDF copy of any rental agreements or receipts

Once you have completed your UHT return online, you will receive a confirmation number and a reference number. You will need these numbers to make your payment or to check the status of your return.

Don’t delay – file your UHT return today!

The Underused Housing Tax (UHT) in Canada was introduced to encourage property owners to make their homes available for rent or sale. As a property owner, it’s important to know your obligations, deadlines, potential penalties, and available exemptions. But don’t worry – filing your UHT return is not complicated or time-consuming. With our checklist and tips, you can easily file your UHT return before the October 31, 2023 deadline. If you have any questions, be sure to consult with a tax professional. Stay compliant, save penalties, and contribute to a more accessible housing market in Canada.

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