The Underused Housing Tax Is Gone, but Past Returns Still Matter

The federal Underused Housing Tax (UHT) has been eliminated starting with the 2025 calendar year. Many owners have taken that to mean the tax is behind them altogether. It is not. For 2022, 2023 and 2024, the obligation to file and pay still stands, and so do the penalties and interest for not doing so. This article is current as of October 25, 2026.

What Was the Underused Housing Tax?

The UHT took effect on January 1, 2022. It was an annual federal tax of 1% of the taxable value of residential property in Canada that was vacant or underused. The person who owned the property on December 31 was responsible, and the return and payment were due on April 30 of the following year.

The tax was aimed mainly at owners who are not Canadian citizens or permanent residents. Canadian citizens and permanent residents who owned property in their own name were never required to file.

What Changed for 2025 and Later?

The Budget 2025 Implementation Act, No. 1 received Royal Assent on March 26, 2026. Under it, no UHT is payable and no return is required for 2025 and later years. The Canada Revenue Agency (CRA) has confirmed this in its guidance.

The new law did not wipe out earlier years. The Underused Housing Tax Act itself is not repealed until January 1, 2035, so until then the filing, payment and penalty rules for 2022 to 2024 remain in force.

Who Had to File for 2022 to 2024?

For all three years, individuals who were not Canadian citizens or permanent residents had to file, as did foreign corporations. This includes people living in Canada on a work permit or study permit, and parents or relatives abroad who are not Canadian citizens or permanent residents but are on title with a family member in Canada.

2022 is the year that caught many Canadians. For that year only, Canadian corporations, partners of Canadian partnerships and trustees of Canadian trusts were also required to file, even when every shareholder, partner or beneficiary was a Canadian citizen. That requirement was removed starting with 2023. If you held a home through a corporation, a partnership or a trust in 2022, that year is worth checking.

The most common misunderstanding is about exemptions. An owner could be exempt from the tax where the property was the primary residence of the owner or the owner’s spouse, where it was occupied or rented for at least 180 days in the year, or where it was newly built, among other cases. An exemption, however, is claimed on the return. Even when no tax was owing, the return still had to be filed.

The filing deadline for 2022 was extended to April 30, 2024. The deadline for 2023 was April 30, 2024, and for 2024 it was April 30, 2025.

What Happens If You Did Not File?

A late return is subject to a penalty equal to the greater of $1,000 for an individual or $2,000 for a corporation, and 5% of the tax plus 3% of the tax for each full month the return is late. In other words, the minimum penalty can apply even when an exemption means no tax is payable. The higher minimums of $5,000 and $10,000 that appeared in earlier guidance were reduced by a 2024 amendment, retroactive to 2022.

Interest is charged on unpaid tax. For 2023 and later years, if a return is still not filed by December 31 of the year after the year it covers, the penalty can be calculated as if certain exemptions did not apply.

Most important, for any year in which no return was filed, the CRA can assess tax and penalties at any time. The passage of time does not close the matter.

What You Can Do Now

Returns for these years can still be filed. If you are unsure whether you were required to file or whether an exemption applied, the starting point is to gather, year by year, how the property was owned and how it was used or rented.

As long as no audit or investigation has begun, the Voluntary Disclosures Program may reduce penalties and interest, and the CRA confirms that the program applies to the UHT. Relief is greater when you apply before the CRA raises the issue with you. Where penalties have already been assessed, there is also a process to ask for them to be waived or cancelled. Which route fits depends on the reason the return was missed, the years involved and the amounts.

The UHT Is Not Toronto’s Vacant Home Tax

The two are often confused, but they are separate taxes. Toronto’s Vacant Home Tax is a municipal tax. Every owner of a residential property in Toronto must declare its occupancy status each year, whatever their citizenship or where they live, and even if they live in the home themselves. A property with no declaration is deemed vacant. Starting with the 2024 taxation year, the rate is 3% of the property’s Current Value Assessment. The elimination of the federal UHT has no effect on Toronto’s Vacant Home Tax.

What Makes Jenna Lee Law Different

At Jenna Lee Law, you are advised directly by a principal lawyer who is also a Chartered Professional Accountant (CPA). We review whether you were required to file for past years and which exemptions applied, and we handle late filings, voluntary disclosures and penalty relief requests with both the legal and tax sides in view. If you held a home through a corporation, partnership or trust in 2022, or if a family member abroad is on title, it is worth confirming that those years are settled, whatever the news about the tax ending.