As we transition into spring, it is also the time of year when tax season shifts into high gear. If higher mortgage rates and inflation were not enough for Canadians to wrestle with, there is a new federal tax applicable to residential property.
Effective January 1st, 2023, the ‘Underused Housing Tax’ (UHT) requires property owners with vacant or property which is considered to be ‘underused’ to pay 1% on the value of residential property owned on December 31 each year. A return, even if you qualify for an exemption, must be filed by April 30*. Failing to file a return may result in a minimum penalty of $5,000 for individuals and $10,000 for a corporation, for each property.
Thus, checking with your accountant if the UHT applies to you and filing a return should be a priority on your spring real estate ‘to do’ list.