The Federal Underused Housing Tax (UHT), Explained: Who Must File, Who Must Pay, and the Three Things Ontario Owners Must Not Confuse

I am Arthur Zhao. Over the past three years I have watched Ontario owners blur three entirely separate policies into one: the federal Underused Housing Tax (UHT), the City of Toronto’s Vacant Home Tax, and the federal foreign-buyer ban. They have different collectors, different targets, and different consequences — and confusing them can cost thousands in penalties. This piece walks through the UHT in full and ends with a table that pulls the three apart cleanly.

What the UHT is, and the rate. According to the CRA / Canada.ca (2026), the UHT is an annual federal tax that first applied to the 2022 calendar year on Canadian residential property treated as vacant or underused, charged at 1% of the property’s taxable value. Taxable value is the greater of the assessed value set by the relevant property-tax authority, or the property’s most recent sale price on or before December 31 of that year (source: UHTN2 calculation guidance). On a Toronto detached home assessed at $1.5 million, a full UHT bill would be $15,000 a year.

Who must FILE — the biggest trap. The CRA splits owners into two groups. An affected owner must file Form UHT-2900 annually for each residential property; an excluded owner need not file or pay. According to the CRA / Canada.ca (2026), an ordinary Canadian citizen or permanent resident who owns a home directly as an individual is generally an excluded owner with no filing duty. But if you hold residential property through a corporation, partnership, or trust, or you are a non-Canadian / non-resident, you likely fall into the affected-owner category — and even if you ultimately qualify for an exemption and owe nothing, the return must still be filed on time. The penalty for missing it is tied to the failure to file, not to any tax owed.

The 2024 relief: certain Canadian corporations, partnerships, and trusts were removed from the filing list. According to the CRA / Canada.ca (2026), for the 2023 and later calendar years, a ‘specified Canadian corporation,’ a partner of a ‘specified Canadian partnership,’ and a trustee of a ‘specified Canadian trust’ were added as excluded owners and no longer have to file a UHT return (the amendments received royal assent on June 20, 2024). Mind the year boundary, though: this relief covers 2023 onward only. For the 2022 calendar year, those same Canadian corporations, partnerships, and trusts were still affected owners and the 2022 filing obligation was not removed. That is why a corporately held property may need a 2022 return filed but no return from 2023 on — same house, different rules by year.

Deadline and penalties — memorize the figures. According to the CRA / Canada.ca (2026), the UHT-2900 return and any tax for a calendar year are due by April 30 of the following year (for the 2024 year, that was April 30, 2025). The penalties were reduced from their original levels: for affected owners, the minimum penalty is $1,000 for individuals and $2,000 for corporations per property, per failure (the old minimums were as high as $5,000 and $10,000 respectively). Unpaid tax also accrues interest from April 30. These are minimums — the actual penalty can be higher where tax is owed.

Key exemptions (you still file, but pay no tax). According to the CRA / Canada.ca (2026), common exemptions include: the property is the primary place of residence for you, your spouse, or your child; it meets qualifying occupancy — at least 180 days in the year fall within one or more qualifying occupancy periods; it is a vacation property in an eligible area used as a residence or lodging for the required days; it is seasonally inaccessible because public access is not maintained year-round; or it is uninhabitable or newly built and not yet complete; or the owner died during the year, among others. Each exemption has its own conditions, day-counts, and definitions, and the property can shift in or out of an exemption from one year to the next as occupancy changes. Again: qualifying for an exemption does not waive the filing duty — an affected owner must file first and claim the exemption on the return, and an unfiled return is penalized even where the exemption clearly applied and no tax was ever owed.

The current status from 2025 — the UHT is being wound down. According to the CRA / Canada.ca (2026), on November 4, 2025 the federal Finance department moved to amend the Underused Housing Tax Act to eliminate the UHT starting with the 2025 calendar year: no tax payable and no return required for 2025 and later. The budget was passed by the House of Commons on November 17, 2025, and the CRA has announced that, until further notice, it does not expect UHT filings or payments for 2025 and subsequent years. This does not touch 2022, 2023, or 2024 — the filing, payment, penalty, and interest obligations for those three years remain in effect. In short: going forward the UHT is effectively over, but historical years still have to be cleaned up.

The three policies, separated (the part that matters most). Clients most often confuse the UHT with Toronto’s Vacant Home Tax, but the collector, base, and filing path are completely different:

• Federal UHT — collector: the federal government (CRA); target: mainly non-resident non-Canadians, plus some owners holding through corporations/partnerships/trusts; rate: 1% of taxable value; filing: self-reported to the CRA on Form UHT-2900; status: eliminated from 2025; only 2022–2024 remain live.
• Toronto Vacant Home Tax — collector: the City of Toronto (municipal, not federal); target: all Toronto residential owners regardless of citizenship or residency, who must file an occupancy declaration every year; base and rate set by the City, unrelated to the UHT; it is a separate municipal regime that the UHT’s elimination does not affect.
• Foreign-buyer ban (Prohibition on the Purchase of Residential Property by Non-Canadians Act) — this is not a tax at all; it is a purchase prohibition that bars most non-Canadians from buying Canadian residential property during the ban period. It governs whether you can buy; the UHT governs whether holding triggers a tax or a return — entirely different in nature, with different statutes, different enforcing bodies, and different penalties. A non-Canadian who buys in breach of the ban faces consequences under that Act; a UHT failure is a tax-filing penalty under a separate regime. Treating them as one policy is the single most common mistake I see, and it is the one most likely to cost an owner money.

This article is general information and is not tax or legal advice. UHT and municipal vacant-home rules are detailed and currently in a transition period; consult a licensed accountant or tax lawyer about your specific ownership structure, and rely on the latest CRA / Canada.ca guidance.