Underused Housing Tax (UHT): Who Needs to File, Rates, and 30 April Deadline

The Underused Housing Tax (UHT) is a federal tax that took effect on 1 January 2022, targeting vacant and underused residential properties. While the tax was primarily designed for non-resident and non-Canadian owners, the filing obligation is surprisingly broad — many Canadian citizens, permanent residents, and Canadian corporations must also file UHT returns, even if no tax is payable.

The CRA has been assessing penalties for non-filing, and with the 30 April 2026 deadline for the 2025 calendar year, now is the time to determine whether you have a filing obligation.

Who the Tax Targets

The UHT is a 1% annual tax on the value of vacant or underused residential property in Canada, applied to:

• Non-resident, non-Canadian owners: Individuals who are neither Canadian citizens nor permanent residents
• Non-resident Canadian citizens and permanent residents: Canadians living abroad who own residential property in Canada
• Foreign corporations: Corporations incorporated outside Canada
• Canadian private corporations: Including Canadian-controlled private corporations (CCPCs) where foreign shareholders hold 10% or more of the equity or voting rights
• Trusts: Trustees of trusts that own residential property (with specific rules depending on the trust’s beneficiaries)
• Partnerships: Partners in partnerships that own residential property, where any partner is an affected owner

Excluded owners (no UHT liability and generally no filing obligation) include:

• Canadian citizens and permanent residents who are resident in Canada and own property directly (not through a corporation or trust)
• Publicly traded Canadian corporations
• Registered charities, cooperative housing corporations, and Indigenous governing bodies
• Individuals who own property as a personal representative of a deceased individual (for the year of death and the following year)

The Surprise Filing Obligation for Canadians

The most common trap: many Canadian citizens and permanent residents who own property through a private corporation, partnership, or trust must file a UHT return — even if the corporation is 100% Canadian-owned, even if the property is your principal residence, and even if no UHT is payable.

Example: A Canadian couple owns their cottage through a family trust for estate-planning purposes. The trustees (the couple) must file a UHT return for the trust’s interest in the cottage. No tax is due (the cottage is not vacant), but the return is mandatory.

Example: A doctor incorporates their medical practice (a CCPC). The corporation owns the medical building. The corporation files a UHT return each year. Again, no tax is likely payable (the building is in active use), but the filing obligation exists.

The CRA has published guidance making clear that the filing obligation is broader than the tax obligation. Non-filing penalties apply regardless of whether tax would have been payable.

How the 1% Tax Is Calculated

The UHT is 1% of the property’s taxable value, which is the greater of:

• The property’s assessed value for property tax purposes (for the calendar year), or
• The property’s most recent sale price on or before 31 December of that year

If neither value is available, the owner must determine the fair market value.

The 1% tax is then prorated based on the number of months the property was owned by an affected owner during the calendar year. If you owned the property for the full 12 months, the tax = 1% × the full taxable value. If you bought it in July, the tax = 1% × taxable value × 6/12.

Exemptions That Reduce Tax to Zero

Even if you are an affected owner, the UHT may not apply if you qualify for an exemption. The key exemptions for residential property:

Based on occupancy:

• The property is your (or your spouse’s) primary residence and you occupy it for at least 180 days in the calendar year
• The property is used as a qualifying residence by a qualifying occupant (e.g., a family member occupying it as their primary residence for at least 180 days)
• The property is rented to an arm’s-length tenant for at least 180 days in the calendar year, under a written lease, in periods of at least one month each

Based on location or use:

• The property is in an eligible area of Canada and is a vacation property used at least 28 days by the owner or their family during the calendar year. (Rural and cottage-country properties often fall under this exemption.)
• The property is uninhabitable for at least 60 consecutive days due to a disaster, dangerous condition, or renovation — and the renovation is completed within a reasonable time
• The property was newly constructed and not substantially completed before April of the calendar year
• The property was not suitable for year-round use (seasonal property)

Based on the owner:

• The owner is a specified Canadian corporation (a CCPC where Canadian citizens or permanent residents own substantially all the equity — specifically a corporation without foreign ownership of 10% or more)
• The owner is a specified Canadian partnership or trust
• The owner died during the year (for that year and the following year, for the personal representative)

Seasonal-use exemption nuance: A cottage that is closed up from October to April technically cannot be occupied for 180 days. This is where the vacation-property exemption (28 days of personal use) is critical for Canadian cottage owners.

Filing Requirements

Form UHT-2900 (Underused Housing Tax Return and Election Form) must be filed annually for each residential property you own as an affected owner. The deadline for the 2025 calendar year is 30 April 2026.

The form requires:

• Property identification (address, roll number, legal description)
• Property type (detached house, condo, duplex, etc.)
• Your ownership percentage and the number of months you held it
• The property’s taxable value and how it was determined (assessed value, sale price, or FMV)
• The exemption you are claiming (if any)
• Calculation of any UHT payable

The form is filed electronically through the CRA’s My Account, My Business Account, or Represent a Client portal, or on paper by mail.

Penalties for Non-Filing

The minimum penalty for failing to file a UHT return by the deadline is:

• $5,000 for individuals
• $10,000 for corporations

The maximum penalty is 5% of the UHT payable plus 3% of the UHT payable per month the return is late, for up to 12 months. Even if no UHT is payable, the minimum penalty is applied for failure to file — this is the part that catches people off guard.

The CRA began issuing non-filing notices and assessing penalties in 2024. There is no de minimis exception and no “I didn’t know” relief. If you are an affected owner and did not file for 2022, 2023, or 2024, you may have penalty exposure across multiple years.

Practical Checklist

Determine your status:

1. Are you a Canadian citizen or permanent resident who owns residential property directly (not through a corporation, trust, or partnership)? If yes, you are generally an excluded owner with no filing obligation.
2. If you own through a corporation (including a CCPC), trust, or partnership — or if you are a non-resident, non-Canadian, or foreign corporation — you are likely an affected owner.

For affected owners: 3. Identify every residential property you held an interest in during 2025 4. For each property, determine whether a tax exemption applies 5. If an exemption applies, confirm you meet the specific conditions (180 days of occupancy, 28 days of vacation use, etc.) and have documentation to support the claim 6. File Form UHT-2900 for each property by 30 April 2026 7. Remit any UHT payable by the same date

If you missed prior-year filings (2022, 2023, 2024): 8. Contact a Canadian tax professional with UHT experience — voluntary disclosure may be available to reduce penalties

Sources

• CRA — Underused Housing Tax
• CRA — UHT Filing and Payment
• CRA — Form UHT-2900