Case Studies
Case Study: How the Elimination of the Underused Housing Tax Affects Non-Resident Owners
Budget 2025 eliminates the Underused Housing Tax for 2025 and future years—explore how this change impacts non-resident owners holding vacant or under-used property in Canada and what actions to consider.
By NomadicTax Research Team • 5-8 min read • November 21, 2025
## Background: What Was the Underused Housing Tax (UHT)?
The Underused Housing Tax, introduced in 2022, applied at 1% annually on the value of certain vacant or under-used residential properties in Canada, primarily targeting non-resident, non-Canadian owners. ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai))
## What Changed in Budget 2025
According to the tax measures in the 2025 Budget, the UHT is **eliminated** effective the **2025 calendar year**. As a result:
- No UHT is payable for 2025 onward. ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai))
- Owners are no longer required to file UHT returns for properties for 2025 or future years. ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai))
- All existing requirements (returns, penalties, interest) for 2022-2024 remain applicable. ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai))
## Real-World Impact: Non-Resident Owner Scenario
**Scenario**: Maria, a citizen of another country, owns a residential property in Toronto which she shared occasionally with family but did not rent out or derive income. Before this change, she would be liable for UHT on its assessed value if she was a non-resident.
| Before Budget 2025 | After Budget’s UHT Elimination |
|---|---|
| Needed to calculate UHT due each year, file annual returns, pay 1% tax on home value. | **No tax due** for 2025 onward; **no filing** responsibilities starting 2025. |
| May have owed penalties or interest from missed UHT filings for past years. | Past years still need compliance—returns for 2022-2024 must still be submitted; penalties/interest still apply. |
## What You Should Do Now
- If you are a non-resident owner or activist property owner, confirm you still filed for 2022-2024 if required, and paid any UHT due.
- Update your tax planning: UHT will no longer factor into decisions about whether to rent, occupy, or otherwise use property.
- For 2025 and onward, you can remove UHT calculations and potential liability and redirect focus to other tax exposures (e.g., rental income, property taxes).
- Ensure your tax professional is aware of this change so your property valuations, returns, and cash flow planning reflects the elimination.
The removal of the Underused Housing Tax removes a compliance burden and cost for many non-resident property owners, but past obligations need resolving.
**Category**: Case Studies
**TaxHome**: Canada
**Author**: NomadicTax Research Team
**ReadTime**: 5-8 min
**Published**: true