On January 1, 2022, the Government of Canada introduced the Underused Housing Tax (UHT) with the intended goal of helping to cool down Canada’s housing market.
The Underused House Tax is an annual 1% tax on residential property owned by non-resident, non-Canadians that is deemed to be vacant or underused by the Canadian Revenue Agency (CRA). There are situations, however, where the tax or reporting obligations could apply to Canadian citizens or residents, so it is important to understand whether you are an excluded or affected owner based on your specific situation.
As far as the application of the UHT goes, property owners can be grouped into three different categories:
Excluded owners that do not have to file at all
Affected owners that must file but qualify for an exemption and don’t have to pay the tax
Affected owners that will have to file and pay the tax
For example, the vast majority of individual Canadians who own property personally (i.e. not through a partnership, corporation, or trust) are excluded owners and do not have to file. In many circumstances where Canadians are impacted, such as when a property is owned by a Canadian corporation, owners may be exempt from paying the tax, but still must file the appropriate documentation or face fines of $5000+.
There are many different types of exemptions for the UHT, such as exemptions that may apply based on where your property is located. Similar to Canada’s Foreign Buyer’s Ban, properties located outside of Census Metropolitan Areas and Census Agglomerations (i.e. properties in Whistler and Pemberton) are eligible for exclusions, but their owners may still be required to file to obtain that exemption.
The key takeaway is that the application of the Underused Housing Tax is quite complicated, and we recommend that you talk to your accountant about how it may impact you and your Whistler or Pemberton property. Filings for the 2022 tax year are due April 30, 2024.
Helpful resources to better understand Canada’s Underused Housing Tax: