Underused Housing Tax Explained for Non-Resident Owners
Ended for 2025 onward — what 2022–2024 returns still require, the exemptions, and the penalties
Reviewed by the Fairlight Accounting cross-border tax team — U.S. & Canadian Tax Desks
The underused housing tax was an annual Canadian federal tax of 1 percent of the value of residential property owned mainly by non-resident, non-Canadian owners and left vacant or underused. Bill C-15, which received Royal Assent on March 26, 2026, ended it for 2025 and later years — but returns and tax for 2022 through 2024 are still required.
On this page
Who it applies to
| Owner | Status for 2022–2024 (nothing to file for 2025 onward) |
|---|---|
| Canadian citizens and permanent residents (owning in their own name) | Excluded — no filing |
| Non-resident, non-Canadian individuals (most U.S. owners of Canadian property) | Affected — a return for each property for each of 2022, 2023 and 2024; tax unless exempt |
| Private corporations, trusts and partnerships | Specified Canadian corporations, partnerships and trusts filed for 2022 only and are excluded for 2023 and 2024; foreign-controlled ones remained affected |
The main exemptions
For 2022 through 2024, the main exemptions were the owner's or their spouse's primary place of residence (with conditions), qualifying occupancy for at least 180 days in the year in periods of at least one month, generally by an arm's-length tenant under a written lease, vacation property in an eligible area (generally rural or small-town locations, which the CRA's place-search tool identifies) that the owner or spouse used personally for at least 28 days in the year, and newly constructed or temporarily uninhabitable property. An affected owner still had to file when an exemption applied.
Filing and penalties
The UHT-2900 return was due April 30 of the following year — April 30, 2025 for 2024, the last taxable year. Missing 2022–2024 returns should still be filed: the late-filing penalty is the greater of C$1,000 for individuals (C$2,000 for corporations) and 5 percent of the tax plus 3 percent per complete month late, with those reduced minimums applying from 2022, and the CRA waived 2022 penalties and interest for returns filed and tax paid by April 30, 2024. Unfiled UHT returns can also hold up a sale: the CRA may refuse a section 116 certificate until they're dealt with. Taxable value was the greater of the property-tax assessed value and the most recent sale price, unless the owner elected fair market value backed by a written appraisal.
The U.S. side
The UHT is not an income tax, so it isn't creditable on Form 1116. UHT paid on a rental property is generally deductible as a rental expense; on a personal-use property it isn't, because individuals can't deduct foreign real property taxes (§164(b)(6), made permanent by P.L. 119-21).
Frequently asked questions
Do Americans owning property in Canada pay the underused housing tax?
Not for 2025 or later — the tax was eliminated from 2025 onward. For 2022 through 2024, non-resident, non-Canadian owners had to file a return for each property and pay 1 percent unless an exemption applied, and those obligations remain.
What exemptions are available?
For 2022–2024: primary residence, qualifying occupancy of at least 180 days in periods of at least one month, eligible-area vacation property used personally for at least 28 days, and some others.
When is the return due?
April 30 of the following year — April 30, 2025 for 2024, the final year. Nothing is due for 2025 or later, but missed 2022–2024 returns should still be filed.
Is the tax creditable against U.S. income tax?
No — it's not an income tax, though UHT paid on a rental property is generally deductible as a rental expense.
Official sources
The Canada Revenue Agency explains: “Under these proposed amendments, no UHT is payable, and no UHT return is required to be filed in respect of the 2025 calendar year or subsequent years. These proposed amendments do not affect the application of the UHT to the 2022, 2023 or 2024 calendar years.” — Canada Revenue Agency, Excise and GST/HST News - No. 121, https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/news121/news121-excise-gst-hst-news-no-121.html
Next step
Fairlight Accounting is a cross-border accounting and tax practice with a U.S. Tax Desk and a Canadian Tax Desk. Our Canadian Tax Desk handles underused housing tax filings and exemption analysis for non-resident owners of Canadian property. See pricing or book a call.
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