Compliance
Staying Compliant Under Canada’s Underused Housing Tax Repeal
With the Underused Housing Tax (UHT) eliminated from the 2025 calendar year, homeowners and non-resident owners must understand the filing, reporting and transition rules to stay compliant.
By NomadicTax Research Team • 5-8 min read • February 23, 2026
## 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](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai))
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](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/news121/news121-excise-gst-hst-news-no-121.html?utm_source=openai))
## 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.