Compliance
Canada’s Underused Housing Tax Is Being Eliminated — What That Means for Property Owners
Budget 2025 proposes to remove the Underused Housing Tax starting 2025, changing both filing obligations and taxable status for many non-resident or under-used properties in Canada.
By NomadicTax Research Team • 5-8 min read • November 24, 2025
## What Is the Underused Housing Tax (UHT)?
The Underused Housing Tax is a federal annual tax (1% of property value) imposed on certain residential real estate properties in Canada that are vacant or under-used, often targeting non-resident or non-Canadian owners. UHT applies to calendar years starting 2022, and returns have to be filed even for years with zero tax liability. ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai))
## What’s Changing Under Budget 2025
- The UHT would be **eliminated** effective for the **2025 calendar year**. Properties would no longer be subject to UHT, and no UHT returns need to be filed for 2025 or future years. ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai))
- However, all obligations continue for prior years: 2022–2024 filings, payments, and penalties still apply. ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai))
## Who Benefits Most
- **Non-resident or non-Canadian property owners** who have been subject to UHT obligations benefit immediately: **no more tax or compliance burden** for 2025 onward.
- **Real estate advisors** and property service companies will see a drop in clients needing UHT filings from 2025 forward.
- Canadian taxpayers with under-used property obligations tied to non-use could see reduced paperwork.
## Steps for Affected Property Owners
1. Review your UHT filing history for 2022–2024. Ensure any pending filings are completed to avoid penalties.
2. For 2025, **no UHT return is required**. Adjust budgets and compliance workflows accordingly.
3. Consult with a tax professional if your property was used partially or had mixed use, to confirm whether your 2024 return needs any updates.
4. Keep in mind that any legislative repeal must pass; until then this remains a **proposed measure**. Monitor Parliament’s progress on Bill C-4.
## Example Scenario
**Owner A**, an overseas investor, owns a secondary home in Vancouver valued at $1 million, which has been vacant for over 6 months each of the years 2022–2024. Under the current UHT rules, Owner A files returns for each year and pays 1% of the home’s assessed value annually. Under the proposed changes, Owner A would still need to file for 2022-2024 but would **not owe or file** anything for 2025 or future years, saving **$10,000/year** and removing ongoing compliance obligations.
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### Actionable Insights
- **If you’re currently subject to UHT**, get your 2022–2024 returns clean and consider winding down UHT-related operations.
- **Stay alert** for feedback periods and final legislation wording, which may adjust effective dates or transitional rules.
- **Financial planning** around property income must now omit UHT liabilities starting 2025, potentially changing valuations and after-tax cash flows.
Category: **Compliance**