The federal Underused Housing Tax (UHT) is finished. Bill C-15, the law that put Budget 2025 into effect, received Royal Assent on March 26, 2026, ending the tax for the 2025 calendar year and every year after.
That's good news for many owners. But it doesn't wipe the slate clean for earlier years, and that's the part people are getting wrong.
The short version
- No UHT return is required, and no UHT is payable, for 2025 or later years.
- All UHT rules still apply to the 2022, 2023 and 2024 calendar years.
- Penalties and interest for late or missing returns from those years can still be charged.
- Municipal vacancy taxes, like Toronto's Vacant Home Tax, are separate and aren't affected.
What the UHT was
The UHT was a 1% annual tax on the value of vacant or underused residential property in Canada, starting January 1, 2022. It mainly targeted foreign owners, but in its early years some Canadian owners also had to file, including certain partnerships, trusts, and private corporations, even when no tax was owed.
The filing requirement caught a lot of people off guard because the penalty for not filing applied even when an exemption meant no tax was payable. Under the Underused Housing Tax Act, the minimum penalty for a late return was $5,000 for an individual and $10,000 for a corporation or other owner.
What changed
Budget 2025 announced the UHT would be eliminated starting with the 2025 calendar year, and Bill C-15 made that law. The CRA confirms that affected owners don't need to file or pay for 2025 and future years, and that the 2022 to 2024 requirements remain in place.
Who may still need to act
You may still have work to do if you owned residential property in Canada on December 31 of 2022, 2023, or 2024 and you were:
- a non-resident who isn't a Canadian citizen or permanent resident, or
- a Canadian partnership, trust, or private corporation (or a partner or trustee) that had a filing requirement under the rules in force for that year.
The rules changed between years, and many Canadian entities were relieved of filing in later years, so check each year separately. If a return was required and you didn't file it, the exposure doesn't disappear just because the tax has ended going forward.
How to fix a missed UHT return
- Confirm whether you were an affected owner for each year, using the CRA's year-by-year guidance.
- File the missing return for every year that applies.
- Look at the Voluntary Disclosures Program. It was overhauled in October 2025 and can provide relief from penalties and part of the interest when you come forward before the CRA contacts you. See our post on the Voluntary Disclosures Program changes.
- Keep records of occupancy and ownership in case the CRA asks.
Don't forget municipal vacancy taxes
The end of the federal UHT doesn't affect city-level taxes. Toronto, for example, runs its own Vacant Home Tax with its own declaration rules. The CRA points out that provincial and municipal vacancy taxes are separate programs, and being exempt from one doesn't make you exempt from another.
Sources
- Underused Housing Tax, Canada Revenue Agency
- Bill C-15, Budget 2025 Implementation Act, No. 1 (Royal Assent text), Parliament of Canada
- Budget 2025: Tax measures, supplementary information, Department of Finance Canada
Need help sorting out UHT filings for past years? Contact us and we'll review what's required and the cleanest way to get compliant.