The Underused Housing Tax is a 1% annual federal tax on the value of vacant or underused residential property owned by non-residents and certain Canadian entities — and the filing penalty is the real sting. Even if you qualify for an exemption, failing to file UHT-2900 by April 30 triggers a minimum $5,000 penalty for individuals ($10,000 for corporations), regardless of whether any tax is actually owed. Canadian citizens and permanent residents who own property directly are excluded owners and don’t need to file at all, but US citizens living in Canada who haven’t obtained PR, Canadian corporations with foreign shareholders, and trustees with foreign beneficiaries must file every year for every property.
What Is the Underused Housing Tax?
Overview
Element
Details
What it is
1% annual tax on residential property value
Who pays
Certain non-Canadian owners
Purpose
Discourage vacant foreign-owned housing
Effective
January 1, 2022
The 1% Tax
Calculation
Example
Property value
$800,000
Tax rate
1%
Annual tax
$8,000
Who Must File
Affected Owners (Must File)
Owner Type
Filing Required
Foreign nationals
Yes
Non-PR individuals
Yes
Foreign corporations
Yes
Canadian corps (certain)
Yes, if affected
Trustees of trusts
Yes, some
Partners in partnerships
Yes, some
Excluded Owners (No Filing)
Owner Type
Filing Required
Canadian citizens
No
Permanent residents
No
Canadian publicly-traded corps
No
Certain registered charities
No
Indigenous governing bodies
No
Government bodies
No
Common Scenarios
Must File UHTA Return
Scenario
Result
US citizen owns cottage
Must file
Private Canadian corp with foreign shareholders
May need to file
Trust with foreign beneficiary
Must file
PR owns through foreign corp
Corp must file
Don’t Need to File
Scenario
Result
Canadian citizen owns home
No filing
PR owns cottage
No filing
Public company owns building
No filing
Exemptions from TAX (Not Filing)
If You Must File, You May Be Exempt From TAX If:
Exemption
Details
Primary residence
If owner lives there
Qualifying occupancy
Tenant or family member
New construction
Construction year
Death of owner
Year of death + 1
Disaster
Uninhabitable
Significant renovations
Seasonal exemption
Qualifying Occupancy Exemption
Occupant
Minimum Period
Arm’s length tenant
180 days
Family member
180 days
Written agreement
Required
Who Counts as Family
Relationship
Qualifies
Spouse/partner
Yes
Parent
Yes
Child
Yes
Grandparent
Yes
Grandchild
Yes
Sibling
Yes
Filing Requirements
Deadline
Tax Year
Filing Deadline
2023
April 30, 2024
2024
April 30, 2025
2025
April 30, 2026
What to File
Form
UHT-2900
Filing
Online or paper
Per property
Separate return each
Information
Property, owner, exemption claim
Penalties
Failure to File
Owner Type
Minimum Penalty
Individual
$5,000
Corporation
$10,000
Plus any tax owing with interest.
Example: Failure to File
Scenario
Cost
Exempt from tax
Still $5,000 penalty
Tax owing + late
$5,000 + tax + interest
False Statements
Penalty
Up to
Gross negligence
Greater of $10,000 or 50% of tax
Canadian Corporations
When Canadian Corps Must File
Situation
Filing Required
No foreign shareholders
Usually no
Foreign shareholder >10%
May need to file
Complex structures
Get advice
Safe Harbors
Exemption
Details
Publicly traded
Excluded owner
90%+ Canadian ownership
May be excluded
Small foreign share
May still need to file
Practical Steps
If You’re Affected
Step
Action
1
Determine if excluded owner
2
If not, must file return
3
Determine if exemption applies
4
File by deadline
5
Pay any tax owing
Record Keeping
Document
Why
Proof of citizenship/PR
Excluded owner status
Lease agreements
Qualifying occupancy
Residency records
Primary residence
Property ownership docs
Filing accuracy
Special Situations
US Citizens Living in Canada
Situation
Result
US citizen, not PR
Must file
May claim exemption
If primary residence
Recommendation
Apply for PR
Snowbirds with Foreign Property
Situation
UHTA Applies?
Canadian owns Florida condo
UHTA is Canadian tax
US condo
Not subject to UHTA
Foreign property in Canada?
Yes, if foreign owner
Multiple Owners
Situation
Filing
Joint owners
Each files (pro-rata)
One excluded, one affected
Affected owner files
All excluded
No filing
Professional Help
When to Get Advice
Situation
Recommendation
Corporate ownership
Tax professional
Trust ownership
Tax professional
Uncertain status
Get clarification
Multiple properties
Tax professional
Cost of Non-Compliance
Item
Potential Cost
Minimum penalty
$5,000-$10,000
Tax owing
1% of property value
Interest
Prescribed rate
Professional fees to fix
$1,000-$5,000
Filing even when exempt is much cheaper than penalty.
The Bottom Line
The UHT’s biggest trap is the filing penalty, not the tax itself. If you’re an affected owner — non-citizen, non-PR, trustee, or certain corporate structures — file UHT-2900 by April 30 every year for each property, even if you claim an exemption. The $5,000-$10,000 minimum penalty for not filing is far more than most accountant fees. Canadian citizens and permanent residents who own directly are excluded and need do nothing. If your ownership structure is at all complex, consult a tax professional — the cost of advice is a fraction of the penalty risk.