Doing taxes can be quite the tiresome process, but it’s important to know as much as you can about this process so you can better navigate this field and file everything professionally. One of the taxes you want to be aware of when filing taxes is that of the “Underused Housing Tax”. Today at Wales Accounting, we want to talk about this tax, why it exists, and how our tax services can help. 

What Is The Underused Housing Tax? 

In simplest terms, the Underused Housing Tax is a yearly 1% tax on the ownership of either underused or vacant housing within Canada. This tax will usually apply to those who are non-residents without Canadian citizenship that own a home in Canada. In other cases, this tax may even apply to Canadian homeowners, but it depends on the circumstances for each situation. This tax will also apply to residential properties owned on the date 12/31/2022. 

Excluded Owners 

The good news is that excluded owners have no liabilities or obligations under the UHT. An excluded owner is as follows: 

• An individual who is of Canadian citizenship or is a permanent resident. 
• Anyone (including Canadian citizens & permanent residents) who owns a residential property as a mutual fund trust, SIFT, or real estate investment trust. 
• A Canadian corporation whose shares are listed on the Canadian Stock Exchange designated for income tax reasons. 
• A registered charity for income tax purposes. 
• A cooperative housing corporation for GST/HST reasons. 
• An indigenous governing body or corporation mainly owned by indigenous governing body. 

Penalties 

There are penalties for those who do not file for an Underused Housing Tax return and are supposed to do so as part of the group who qualifies for it. Those who fail to file for this tax will receive a minimum penalty of $5000. Corporations are subject to a heavier minimum penalty of $10,000. 

Exemptions 

Ownership of a residential property may be exempt from this tax for a calendar year depending on the factors listed below: 

• The type of owner. Including the owner of a specified Canadian corporation, a new owner in the calendar year, a deceased owner, etc. 
• The occupant of the property. Including if it’s the primary place of residency for you or a common-law partner/spouse/child.  
• The availability of said residential property. Including if it’s been newly built, unsuitable for being lived in year-round, or inhabitable due to renovations or a hazardous environment. 
• The location of the property and how it is being used.  

How Our Team Can Help 

If you need to file for this tax as well as others in a professional manner, let our team here at Wales Accounting do the complicated work for you. With the help of our highly experienced team, we can make sure that your taxes are filed in the best, most professional way possible. This way, you don’t run into any hiccups and get the best out of your tax returns. To learn more about our income tax filing in Richmond Hill, be sure to call us at (905) 508-9262 today!