The Government of Canada introduced the Underused Housing Tax (UHT) on January 1, 2022, with the objective of helping to stabilize the Canadian housing market.
Generally speaking, the UHT is an annual 1% tax on residential property that is deemed vacant or underused by non-resident, non-Canadian property owners, as determined by the Canadian Revenue Agency (CRA). However, there are situations where Canadian citizens or residents may also have to comply with the tax or reporting obligations, depending on their specific situation.
Property owners can be grouped into three categories for the UHT’s application:
- Excluded owners who do not need to file.
- Affected owners who must file but qualify for an exemption and do not have to pay the tax.
- Affected owners who must file and pay the tax.
Individual Canadians who own property personally (not through a partnership, corporation, or trust) are typically excluded and do not need to file. However, for situations where Canadians are impacted, such as when a Canadian corporation owns a property, owners may still need to file appropriate documentation, or they could face fines of $5,000+.
The UHT offers many exemptions, including ones that depend on the property’s location. Properties located outside of Census Metropolitan Areas and Census Agglomerations, such as Whistler and Pemberton, are eligible for exclusions similar to Canada’s Foreign Buyer’s Ban. However, owners may still be required to file to obtain the exemption.
The application of the Underused Housing Tax is quite complicated so I recommend that you talk to your accountant about how it may impact you and your Whistler or Pemberton property.
The deadline for filings for the 2022 tax year is April 30, 2023. That said, due to the confusion surrounding the new tax, the Federal Government has stated that they will waive penalties and interest for any late-paid UHT as long as the return is filed or the UHT is paid by October 31, 2023.
Please make sure that you contact your accountant today to ensure compliance and to take advantage of available exemptions for the underused housing tax. If you would like a recommendation for a local accountant, please contact me.