Could the Underused Housing Tax Affect You?

The Underused Housing Tax is a new 1% tax for owners of empty or rarely used homes in Canada, specifically if the owner isn’t a Canadian citizen or permanent resident. Put simply, if you own a home and it’s sitting empty, not being built on, or you’re not using it much, you need to know about this tax. It’s been in place since the beginning of 2022. 

Who Needs to Pay Attention? 

Owners fall into two groups: “affected owners” who need to file a tax return for this, and “excluded owners” who don’t. The rules around this tax have a lot of ifs and buts, so here’s a quick rundown: 

• If a company owns the home, it needs to file a return. But if Canadian citizens or permanent residents own 90% or more of the company, it won’t need to pay the tax. 
• If a partnership owns the home or gets rental income from it, it should file a return. But if the partners are all Canadian citizens or permanent residents, they’re off the hook. 
• If a person who isn’t a Canadian citizen or permanent resident owns the home, they need to file. 
• If a Canadian citizen or permanent resident owns the home, they don’t need to worry about filing. 

 “Getting Out” of Paying the Tax 

Not everyone has to file a return, but if you do, you might still not have to pay the tax if certain things apply to you, like: 

• You or your close family live in the home. 
• You’ve rented out part of the home. 
• You or your family lived there because of work in Canada. 
• The home isn’t fit to live in all year round or you can’t get to it at certain times. 
• Something big and out of your control made the home unlivable for a while, like a natural disaster or big construction work. 

There are a few other special cases, especially if the owner has passed away. Talking to an Orientum Group Tax Expert can give you all the details. 

What If You Own More Than One Property? 

For folks with more than one property, keep these points in mind: 

• You need to file a separate return for each home. 
• If you’re married or with a partner and one of you isn’t a Canadian citizen or permanent resident, you might not get the exemptions for any of your homes. 

This Underused Housing Tax has a lot of small details to get right, especially if you need to file. Getting help from Orientum Group can make sure you do everything correctly.