Canada's recent enactment of the Underused Housing Tax (UHT) is generating buzz. Effective since January 1, 2022, this 1% tax targets "underused" residential properties, aiming to curb foreign ownership of vacant real estate in Canada.
The Underused Housing Tax (UHT) mainly targets vacant properties owned by non-Canadian citizens or non-Canadian permanent residents. However, in some cases, even Canadians can be subject to the tax. This is because the UHT also applies to Canadian citizens and permanent residents who own vacant properties that are not their primary residence. Affected owners span across:
- Trustee individuals with residential property ownership, excluding certain testamentary trust situations.
- Non-Canadian citizens and non-permanent residents with residential property.
- Canadian corporations with most shares unlisted on Canadian stock exchanges
Meanwhile, "excluded owners" have no UHT obligations. They typically include Canadian citizens or permanent residents, real estate investment trust owners, and registered charities, among others.
The Underused Housing Tax (UHT) might not seem important to farmers right now, but it's important to be aware of the current rules. The Christian Farmers Federation of Ontario (CFFO) is asking for an exemption for farmers from the filing requirements of the UHT. However, for now, farmers still need to file by the deadline, just like everyone else.
Interestingly, owning a residential property doesn't automatically result in UHT. Exemptions might apply based on factors like owner type, property availability, usage, or occupancy status. For instance, a vacation property used for at least 28 days a year by the owner, or their partner can qualify for exemption. Regardless, all affected owners must file a UHT return, even if exempt from the tax.
Calculating your UHT is straightforward. Take your property’s value (either its assessed taxable value or the recent sale price) and apply the 1% tax rate. Then, factor in your ownership percentage. For example, for a property valued at $649,000, owned 50%, the UHT liability is $3,245.
April 30 stands as the filing and payment deadline for the previous calendar year. Late filings and payments carry significant penalties, with the smallest penalty being $5,000 for individuals and $10,000 for corporations.
The Underused Housing Tax (UHT) might not seem important to farmers right now, but it's important to be aware of the current rules. The Christian Farmers Federation of Ontario (CFFO) is asking for an exemption for farmers from the filing requirements of the UHT. However, for now, farmers still need to file by the deadline, just like everyone else.