Filing Alert – Underused Housing Tax (“UHT”) Return

While you are enjoying this beautiful summer season in Vancouver, we would like to take this opportunity to remind you about the filing the UHT-2900 Underused Housing Tax Return and Election Form. Although the technical deadline for 2022 calendar year remains unchanged (i.e., April 30, 2023), the Canada Revenue Agency (“CRA”) has confirmed that no late filing penalties or interest will be assessed for UHT returns and tax payments received by the CRA on or before October 31, 2023.

Large penalties may be imposed for failure to file UHT returns. There is a minimum penalty of $5,000 for individuals and $10,000 for other entities, such as Canadian corporations, partnerships, and trusts, regardless of whether there is any UHT tax liability.  Additional penalties may apply based on a percentage of UHT payable. It is important to note that there is no time limit for the government to assess taxes or penalties until a UHT return is filed by the owner.

As noted in our previous blog, The Underused Housing Tax (UHT) – What You Need to Know, although the UHT is aimed at non-resident, non-Canadian owners of Canadian residential property, certain Canadian owners will still have a filing obligation where “residential property” is owned. We discuss what residential property below.

Canadian residential property owners1 that will need to file a UHT return include but are not limited to (referred to as “affected owners”):

  • Canadian private corporations
  • a partner of a Canadian partnership
  • a trustee of family or personal trust (including a personal Canadian trust)
  • a trustee of a bare trust (including, for example, parents holding title of a child’s property)
  • any other person who is an owner (other than an “excluded owner”) of a residential property in Canada on December 31 of a given calendar year.

The UHT return is required to be filed to claim applicable exemptions2.  


Per UHTN1 “ Introduction to the Underused Housing Tax” a residential property is defined as property that is either of the following:

  • a detached house or similar building that contains not more than three dwelling units3,
  • along with any appurtenances  and the related land, or
  • a semi-detached house, rowhouse unit, residential condominium unit or other similar premises, along with any common areas, appurtenances and the related land.

This may not be clear in the context of property under development as to whether a residential property exists. UHT Notice 15 – Questions and Answers about the UHT offers additional clarification and provides further commentary on the Underused Housing Tax Act (“UHTA”).

A few key clarifications and updates are as follows:

Residential Condominium Unit 

The term residential condominium unit is not defined in the UHTA. The CRA defines the term as a bounded space in a building that is (or is intended to be):

  1. designated or described as a separate unit in the building on a registered condominium or strata lot plan or description, or a similar plan or description registered under the laws of a province, and includes any interest in land pertaining to ownership of the unit; and
  2. a dwelling unit.

In other words, where residential condominium units in a building are (or are intended to be) divided for separate ownership (e.g., for “stratification”), each unit will be considered an individual residential property and will require its own UHT return.

The CRA’s position is that the stratified or to be stratified unit will be Residential Property when the unit is substantially completed (generally, 90% or more) on December 31 of a calendar year. In such cases, a UHT return will be required for each unit.

Construction Process and New Inventory4 

If you are an affected owner of a residential property on December 31 of a given calendar year, you are required to file a UHT return, but your ownership of the residential property can be exempted from the UHT for the calendar year if the construction of the residential property is not substantially completed before April of the calendar year. In other words, the CRA considers a property to become a residential property for UHT purposes when construction of the property is substantially completed (generally, 90% or more) allowing it to be reasonably inhabited.  The determination of whether the construction of a property is substantially completed on a particular day is a question of fact. Builders and owners of properties should assess and make that determination on a case-by-case basis.

If the construction of the residential property is substantially completed before April of the calendar year, the residential property can be exempt from the UHT for the calendar year if both the following conditions are met:

  1. the residential property is offered for sale to the public in the calendar year; and
  2. the residential property has never been occupied by an individual as a place of residence or lodging in the calendar year.


The CRA provides relief from reporting the assessed value and most recent sales price of a resident property on Lines 280 and 285 of the UHT return if both of the following conditions are met:

  1. no UHT tax is payable in respect of the residential property for a calendar year because the residential property is exempt from the UHT for the calendar year; and
  2. the owner files the UHT return by December 31 of the following calendar year.
    • Note that if a UHT return for 2022 is filed after October 31, 2023, and before December 31, 2023, late filing penalties will still apply, even if there is no tax liability.

The above outlines some details that may be relevant if you are constructing and selling real property. The UHT rules apply to all affected owners. If you are uncertain of whether your property is a “residential property” or if you are required to file a UHT return due to your ownership of a property, please contact your Smythe Advisor for further guidance.

1 You are an owner of a residential property if any of the following apply:

  • you are identified as an owner of the property in the land registration system where the property is located;
  • you are considered an owner of the property based on such a land registration system;
  • you are a life tenant under a life estate in the property;
  • you are a life lease holder of the property; or
  • you are a lessee that has continuous possession of the land on which the property is situated under a long-term lease.

2 Exemptions may be available based on location and use of the property; limited availability of the property; occupant of the property; and the type of owner (e.g., Canadian corporations with less than 10% of their votes or value directly or indirectly owned by foreign individuals or corporations may be eligible for an exemption).

3dwelling unit is a residential unit that contains:

  • private kitchen facilities
  • a private bath
  • a private living area

4 UHTN 13 Exemptions for New Residential Properties