The Government of Canada introduced an underused housing tax on the ownership of vacant or underused housing in Canada. The underused housing tax took effect on January 1, 2022.
Generally, the underused housing tax is payable by non-resident non-Canadian owners of vacant or underused housing. The vast majority of Canadian owners of residential property are excluded owners and, therefore, do not have any obligations and liabilities. However, the underused housing tax is payable by certain Canadian owners of housing in limited situations.
Starting with the 2022 calendar year, owners of housing in Canada have to determine their obligations and liabilities. Some affected owners have to file an annual return and pay the underused housing tax. Other affected owners have to file an annual return but are exempt from paying the underused housing tax. Excluded owners do not have to file an annual return or pay the underused housing tax.
A return must be filed for each of the properties in Canada where the following conditions are met on December 31 of a calendar year:
the property is a residential property
you are an owner of the residential property
you are not an excluded owner of the residential property
Various exemptions are available e.g. for vacation properties, new owners, properties unsuitable for year-round use etc.
The return is due by April 30 of the following year. Failure to file a return on time attracts a minimum penalty of CAD 1,000 for individuals and CAD 2,000 for corporations.
If you own residential property in Canada, contact us to know your obligations.