The Federal Government's Most Confusing Property Tax Is Gone. Here's What Changed, Who It Affected, and What You Still Need to Know.
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The Underused Housing Tax is dead — at least for 2025 and every year after it.
On March 26, 2026, Bill C-15 received Royal Assent, officially enacting a package of measures from the 2025 federal budget that includes the elimination of the UHT. The practical result: if you own residential property in Canada, you do not need to file a UHT return for the 2025 tax year, and you will never need to file one again.
Worth noting: the UHT is separate from land transfer tax, which applies at the time of purchase — not annually.
For the majority of Canadian homeowners, this changes very little in terms of actual tax owed — CRA itself has acknowledged that the vast majority of Canadian individuals who own residential property were always excluded from the UHT. But the tax created a compliance headache that caught far more people than it was ever designed to tax, particularly anyone who held property through a numbered company, family trust, or partnership. If your accountant has been sending you UHT reminders every spring, that cycle is over.
The Underused Housing Tax was a federal 1% annual tax on the ownership of vacant or underused residential property in Canada, introduced effective January 1, 2022. According to the Department of Finance, its stated purpose was to ensure non-resident and non-Canadian owners of empty homes contributed their fair share and to keep housing available for Canadians.
The problem was never really the tax itself. It was the filing requirement.
Under the UHT, every "affected owner" had to file a separate return for each residential property they owned as of December 31 of the calendar year — even if they qualified for an exemption and owed nothing. The annual deadline was April 30 of the following year. Miss it, and the minimum penalties were $5,000 for individuals and $10,000 for corporations, with higher penalties kicking in for returns filed more than eight months late.
That created a situation where the cost of non-compliance vastly exceeded the tax many owners would have owed. A Canadian who owned a cottage through a family trust and had no UHT liability whatsoever could still face a $10,000 penalty for simply not knowing they needed to file.
The UHT divided property owners into two categories: "excluded owners," who had no obligations at all, and "affected owners," who had to file regardless of whether they owed tax.
The vast majority of individual Canadian homeowners were excluded owners. But the system pulled in a surprisingly wide range of people who owned property through structures that weren't individuals — corporations (including numbered companies), trustees of trusts, and partners in partnerships. Even certain Canadian citizens and permanent residents could be classified as affected owners depending on how they held title.
The CRA extended the filing deadline for the first UHT year specifically because so many people struggled to determine whether they were affected — a tacit admission that the system had overreached.
Amendments in 2024 (Bill C-69) already narrowed the filing base significantly by expanding the definition of "excluded owner" starting with the 2023 calendar year. Bill C-15 finishes the job by eliminating the entire tax and filing requirement from 2025 onward.
The federal Notice of Ways and Means Motion for Budget 2025 adds provisions to the Underused Housing Tax Act stating that no UHT is payable for 2025 and subsequent calendar years and that no UHT return is required to be filed for those years.
Here is what that means in practice:
The distinction between "no tax payable and no return required" (effective immediately for 2025) and "full statutory repeal" (2035) is a legislative technicality. For homeowners, the practical effect is the same: the UHT is done. The change arrives during an uncertain period for the Canadian housing market, but it simplifies the compliance picture for property owners of all types.
If you received a UHT reminder from your accountant or tax preparer this spring, you can safely disregard it for the 2025 tax year. But confirm with them that any outstanding returns for 2022–2024 have been filed — those penalties are still very real.
This is the detail that matters most for anyone who may have missed a filing.
CRA's Excise and GST/HST News No. 121 explicitly confirms that filing, payment, penalties, and interest obligations for the 2022, 2023, and 2024 calendar years remain in effect. The repeal is forward-looking only.
If you owned residential property through a corporation, trust, or partnership during any of those years and were classified as an affected owner, you were required to file a UHT return for each property — even if you qualified for an exemption. If you didn't file, the penalties still apply, and CRA can still assess them.
The practical step: review your UHT filing history for 2022–2024 with your accountant. If returns are outstanding, filing late is still better than not filing at all.
If this experience has prompted a broader look at your property-related tax obligations, understanding how property tax assessments work is a good starting point.
The UHT was one piece of a broader federal strategy to address housing affordability and discourage vacant or underused residential properties. A Department of Finance briefing described the UHT as a tool to ensure non-resident owners pay their fair share, sitting alongside the Prohibition on the Purchase of Residential Property by Non-Canadians Act — the foreign buyer ban. That ban took effect on January 1, 2023, and has since been extended through January 1, 2027.
Bill C-15 also eliminates the federal luxury tax on specified aircraft and vessels, which KPMG's analysis of the enacted measures groups alongside UHT repeal and accelerated capital cost allowance for purpose-built rental housing. The pattern suggests a broader federal shift: away from niche, behaviour-shaping asset taxes that created compliance friction, and toward direct incentives for housing supply.
The recent elimination of HST on new home purchases up to $1 million is another example of that direction.
That said, the federal UHT was never the only vacant-property tax in play. Provincial and municipal vacancy taxes — including those in British Columbia, Toronto, and Ottawa — remain in effect and operate under entirely separate rules. The elimination of the federal UHT does not affect those obligations.
For most homeowners, the answer is simple: nothing.
If you were an excluded owner under the old rules — which includes the vast majority of individual Canadians who own their home directly — the UHT never applied to you, and its elimination changes nothing about your tax situation.
If you own property through a corporation, trust, or partnership:
Meanwhile, municipal property taxes remain a separate and growing cost for Canadian homeowners — Calgary recently finalized an 8.1% property tax increase driven largely by provincial education levies, a reminder that removing one tax obligation doesn't eliminate the broader cost pressures on property owners.