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The Underused Housing Tax (UHT) is a 1% annual federal tax on the value of vacant or underused residential property in Canada, primarily targeting certain non-resident, non-Canadian owners, though some Canadian owners can still have annual filing obligations even when no tax is owed.
The tax applies at 1% of a residential property’s value for owners defined as “affected owners” under the federal rules, and it operates as an annual return, not a one-time charge. Some owners who ultimately owe no tax still have to file a UHT return to claim an available exemption.
For mortgage professionals, the filing obligation matters as much as the tax itself: it can apply to non-resident owners, or to certain Canadian ownership structures (such as some corporations or partnerships) holding residential property, and it’s worth flagging early on any file involving an investment or rental property mortgage with a non-standard ownership structure.
1% annual tax: the UHT rate applies to the value of a residential property owned by an affected owner.
Filing can be required even with no tax owing: some owners must file an annual UHT return to claim an exemption, not just to remit tax.
Relevant to investment-property files: often comes up alongside an investment or rental property mortgage for non-resident or non-standard ownership structures.
Separate from the foreign buyer ban: the foreign buyer ban restricts purchases; the UHT is an annual ownership tax that can apply on an ongoing basis regardless of when the property was bought.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
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