What Was the UHT and What’s Changing?
The Underused Housing Tax (UHT) was introduced in 2022 to target vacant or underused residential properties, especially by non-residents. It applied annually at 1 % of property value, required filings, and compliance for previous years. (budget.canada.ca)
As of 2025 calendar year, Canada has proposed eliminating the UHT: no tax payable, no returns required thereafter for 2025 and beyond. But obligations for 2022-2024 remain active. (canada.ca)
Obligations That Continue vs Those Ceased
| Year | Tax Payable | Filing Required |
|---|---|---|
| 2022-2024 | Yes | Yes – returns, possible penalties and interest apply |
| 2025-onwards | No | No return required |
Any property owner, Canadian or non-resident, with UHT obligations for 2022-2024 must ensure all filings are completed, taxes are paid, and penalties/interest addressed. Failure can lead to enforcement and ongoing obligations.
Who Needs to Take Action
- Non-resident owners of residential property in Canada: review whether they filed returns for 2022-2024; ensure any due amounts are paid.
- Canadian residents owning additional property (e.g. second home, cottage): determine if that property was under the UHT regime and check compliance.
- Real estate professionals or advisors: update clients who may assume UHT is no longer relevant in any case.
Practical Compliance Tips
- Gather records for 2022-2024 filings, valuations, occupancy data (to show usage), and any correspondence from CRA.
- If you missed a filing, consider filing voluntarily to reduce penalties/interest.
- Document all actions taken after repeal announcement—if CRA requests explanation for previous years, having organized documentation helps.
Transition Considerations
- Some people mistakenly believe that because UHT is eliminated for 2025, all obligations are gone. They are not—only those for years 2022-2024 persist.
- Entities or trusts involved in these properties need to assess whether they were required to file—UHT applies to individuals and non-resident owners, but depending on ownership structure others might have had obligations.
Case Example
Jane, a non-resident who owned a rental cottage in British Columbia but never filed UHT returns for 2022-2024. She just sold the property in June 2025.
- Even though UHT is gone for 2025+, she must file returns for 2022-2024 eras.
- Upon sale, she assesses whether occupancy and usage exempts her from UHT; and then reports any UHT owing.
- After receiving CRA confirmation, no obligation going forward.
Summary
Elimination of UHT is significant—it reduces compliance burden going forward. But beware: past obligations remain. Ensuring all filings and payments for 2022-2024 are addressed is essential to avoid future penalties or unexpected assessments.