Tax on underutilized housing

The Underutilized Housing Tax came into effect on January 1, 2022. This annual 1% tax generally applies to non-resident, non-Canadian owners of vacant or underutilized residential real estate in Canada and to certain Canadian owners in specific situations.

Who must file and pay the tax?

If you are an excluded owner of residential real estate in Canada, you have no obligations or liabilities under the Underutilized Housing Tax Act.

An excluded owner can be, among others:

• an individual who is a Canadian citizen or permanent resident, unless they are on the list of owners subject to the tax;
• any person, including an individual who is a Canadian citizen or permanent resident, who owns residential real estate as a trustee of a mutual fund trust, a real estate investment trust, or a specified investment flow-through trust for Canadian income tax purposes;
• A Canadian corporation whose shares are listed on a stock exchange in Canada designated for Canadian income tax purposes;
• A registered charity for Canadian income tax purposes;
• A housing cooperative for Canadian GST/HST purposes;
• An Indigenous governing body or a wholly-owned corporation in such a governing body.

If you are not an excluded owner, you are designated as a taxable owner and have obligations under the Underutilized Housing Tax Act in respect of residential real property you own in Canada. A taxable owner may include, but is not limited to:

• an individual who is not a Canadian citizen or permanent resident;
• an individual who is a Canadian citizen or permanent resident and who owns residential real property as a trustee of a trust (other than as the personal representative of a deceased person);
• any person, including an individual who is a Canadian citizen or permanent resident, who owns residential real property as a member of a partnership;
• a corporation incorporated outside Canada;
• a Canadian corporation whose shares are not listed on a stock exchange in Canada designated for Canadian income tax purposes;
• a Canadian corporation without share capital.

If you are a property owner subject to the tax, you must file a return for the underutilized housing tax for each residential property you own in Canada as of December 31. You must also pay the underutilized housing tax, unless you qualify for an exemption for the calendar year in respect of a property you own. In this case, you must still file a return for the calendar year.

https://www.canada.ca/en/services/taxes/excise-taxes-duties-and-levies/underused-housing-tax.html

Back to advices