Exemptions for Residential Properties That Cannot be Used Year-round
Underused Housing Tax Notice UHTN9
February 2023
The purpose of this notice is to help you determine if your ownership of a residential property qualifies for the exemption for residential properties that are not suitable for year-round use as a place of residence or the exemption for residential properties that are seasonally inaccessible because public access is not maintained year-round.
Except as otherwise noted, all statutory references in this publication are to the provisions of the Underused Housing Tax Act (UHTA) and its regulations. The information in this publication does not replace the law found in the UHTA and its regulations.
Table of Contents
Overview
The Government of Canada has introduced an underused housing tax on the ownership of vacant or underused housing in Canada. The Underused Housing Tax Act (UHTA), which governs the underused housing tax, received royal assent on June 9, 2022. The underused housing tax took effect on January 1, 2022.
The underused housing tax
If you are an affected owner of a residential property on December 31 of a calendar year, you have to pay the underused housing tax for the residential property for the calendar year, unless your ownership of the residential property is exempt from the tax for the calendar year.
Where certain conditions are met, your ownership of a residential property may be exempt from the underused housing tax if the property is any of the following:
- a vacation property that is located in an eligible area of Canada
- used as a primary place of residence or for qualifying occupancy
- not suitable for year-round use
- seasonally inaccessible
- uninhabitable during the calendar year
- newly constructed
Your ownership of a residential property may also be exempt if you are any of the following:
- a partner of a specified Canadian partnership, a trustee of a specified Canadian trust, or a specified Canadian corporation
- a new owner
- a deceased individual, or their personal representative or co-owner
For more information about the above exemptions, refer to the various Underused housing tax notices.
Even if your ownership of a residential property is exempt from the underused housing tax for a calendar year, as an affected owner, you still have to file a return for the residential property using Form UHT-2900, Underused Housing Tax Return and Election Form.
There are significant penalties if you fail to file an annual return when it is due. Affected owners who are individuals are subject to a minimum penalty of $5,000. Affected owners that are corporations are subject to a minimum penalty of $10,000. For more information, refer to Underused Housing Tax Notice UHTN3, Filing a Return and Paying the Underused Housing Tax.
For an explanation of affected owner, owner and residential property, and to determine whether the underused housing tax applies to you, refer to Underused Housing Tax Notice UHTN1, Introduction to the Underused Housing Tax.
Exemption for residential properties that are not suitable for year-round use as a place of residence
If you are an affected owner of a residential property on December 31 of a calendar year, your ownership of the residential property is exempt from the underused housing tax for the calendar year if the residential property is not suitable for year-round use as a place of residence.
Example 1
An individual who is not a citizen or permanent resident of Canada is the only person identified in the land registration system as an owner of a property in Canada (a detached house) that they purchased in 2015.
The house was constructed for occupancy during the spring, summer and fall. It does not have a central heating system, such as a furnace or boiler, or in-room heating sources, such as fireplaces or electric baseboard heaters. The individual uses a portable space heater as needed, but otherwise the house does not have the facilities for winter accommodation.
The individual has to file a return for the property for the 2022 calendar year by April 30, 2023. They do not have to pay the underused housing tax for their 100% ownership percentage of the property for the 2022 calendar year because the house is not suitable for year-round use as a place of residence.
Exemption for residential properties that are seasonally inaccessible
If you are an affected owner of a residential property on December 31 of a calendar year, your ownership of the residential property is exempt from the underused housing tax for the calendar year if the residential property is seasonally inaccessible because public access is not maintained year-round.
Example 2
An individual who is not a citizen or permanent resident of Canada is the only person identified in the land registration system as an owner of a property in Canada (a detached house) that they purchased in 2021.
The property fronts onto a road that is not plowed, salted or sanded in winter. As a result, the road is impassable throughout the winter season and the individual cannot get to the property during that time.
The individual has to file a return for the property for the 2022 calendar year by April 30, 2023. They do not have to pay the underused housing tax for their 100% ownership percentage of the property for the 2022 calendar year because it is seasonally inaccessible as public access is not maintained year-round.
Keeping records
Every affected owner of a residential property must keep records to enable the determination of their obligations and liabilities under the UHTA. Generally, you must keep the records for six years from the end of the year to which they relate.
If you do not have adequate records to support that your ownership of a residential property is exempt from the underused housing tax for a calendar year, the Canada Revenue Agency may disallow your exemption.
Further information
For all technical publications related to the UHTA, go to Underused housing tax technical information.
For general enquiries about the underused housing tax, call the applicable telephone number:
- if you are calling about a residential property that is owned by an individual and you are calling from:
- within Canada or the United States, call 1‑800‑959‑8281
- outside Canada and the United States, call 613‑940‑8495 (collect calls accepted)
- if you are calling about a residential property that is owned by a corporation and you are calling from:
- within Canada or the United States, call 1‑800‑959‑5525
- outside Canada and the United States, call 613‑940‑8497 (collect calls accepted)
To request a ruling or an interpretation related to the application of the underused housing tax, write to:
GST/HST Rulings Directorate
Canada Revenue Agency
Place de Ville Tower A 5th floor
320 Queen St
Ottawa ON K1A 0L5
Canada
Fax: 1‑418‑566‑0319
Refer to GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service , which explains the rulings and interpretations service offered by the Canada Revenue Agency.
Page details
- Date modified: