Underused Housing Tax Relief Extended For 6 Months: What You Need to Know?

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    29 Nov 2023
    On November 1, 2023, the Government of Canada extended the transitional relief period for the Underused Housing Tax (UHT) until April 30, 2024.  What does this mean for our readers scrolling this blog? First of all, it means that if you are an owner of residential property in Canada, you get major relief. You have 6 more months to file your UHT returns for the calendar year of 2022. No need to pay any interest or penalties. Why is the Underused Housing Tax filing deadline being constantly extended? Due to several reasons. For instance, the UHT is complex, offering several exemptions, deductions, and credits. More so, it is a new tax, so there is a lot of uncertainty about its implementation and administration.  Besides, it can also have a significant impact on property owners, particularly non-resident owners of residential properties in Canada.  For all these reasons, we decided to make it easy for you to get through UHT. In this blog, we’ll explain what UHT is, and whether you’ll be impacted by it or not. Also, find a professional CPA in Surrey Canada by booking our free 30-minute consultation and filing your UHT return before the deadline!

    What Is The Underused Housing Tax?

    What Is The Underused Housing Tax?   The UHT was introduced through the Underused Housing Tax Act 2022 in the federal budget of the same year. Why? Canada is facing the issue of affordable housing. By introducing this new tax, the government is encouraging the sale of vacant or underused residential properties, so that more affordable houses are accessible to the general public.  Who needs to look out: 
    • Non-resident owners of residential properties vacant or underused for more than six months in a calendar year in Canada. 
    • Canadian resident owners with more than one residential property in Canada and renting out one or more of those properties.
    If you are in Surrey, you are in luck! CJCPA is offering special consultation for its Corporate Tax filing Surrey Canada services, including UHT. Contact us to know more! 

    Are You Affected By The Underused Housing Tax? Find Out!

    Underused Housing Tax   The Underused Housing Tax applies to non-resident owners of residential properties in Canada that are vacant or underused for more than six months in a calendar year.  Here are more details that will help you determine liability for the UHT: 
    • Residency status: The tax applies to non-resident owners of residential properties in Canada.
    • Property usage: Owners of residential properties that are vacant or underused for more than six months in a calendar year are liable for UHT. 
    • Exemptions and deductions: Several exemptions and deductions may apply to reduce the amount of tax payable. For instance, properties used as primary residences or held as principal residences are exempt from the tax.
    However, the tax on underused housing also applies to Canadian residents who own more than one residential property in Canada and who rent out one or more of those properties. Note: A vacant property is not occupied for the entire calendar year, while an underused property is occupied for less than six months in a calendar year. Seek Professional Corporate Tax Filing Canada Services for more information.

    How Much Is The Underused Housing Tax? 

    The Underused Housing Tax is equal to 1% of the fair market value of the property.  You can determine the fair market value through a professional appraisal. However, there are simplified methods available for properties that meet certain criteria. Also, there are some exemptions and deductions that may apply to reduce the amount of tax payable.

    What Is The Transitional Relief Period?

    What is Transitional Period ?   The transitional relief period is a time during which penalties and interest will not be charged on late-filed UHT returns or late-paid UHT.  The transitional relief period was originally scheduled to end on October 31, 2023, but the deadline was extended to April 30, 2024. The government of Canada did recognise that people need time to familiarize themselves with this new tax, and they will need time to comply with filing requirements. 

    What Does This Extension Mean For Affected Owners?

    The extension of the transitional relief period will give affected owners more time to familiarize themselves with the Underused Housing Tax and to determine their filing and payment obligations.  The affected owners will have more time to gather the necessary information, file their UHT returns, and avoid penalties and interest.

    What Should Affected Owners Do Now?

    If you are an affected owner of residential property in Canada, you should take the following steps:
    • Assess your property's usage: Determine if your property is vacant or underused for more than six months in a calendar year.
    • Review exemptions and deductions: Check if your property falls under any of the exemptions or deductions that may apply.
    • Gather necessary information: Collect relevant documents, including property titles, appraisal reports, rental agreements, and any other information related to the property's usage.
    Finally, complete and submit your UHT return by April 30, 2024, to avoid penalties and interest.

    Seeking Professional Guidance: Here’s How CJCPA Can Help!

    Professional Guidence for Underused Housing Tax   Understanding the minute details of Underused Housing Tax can be complex. That’s why, we advise you to seek assistance from qualified tax professionals, such as those at CJCPA, to ensure an accurate assessment of your property's status, calculation of the tax, and timely filing of your UHT return. Surrey-based CJCPA can help you with all aspects of the Underused Housing Tax, including:
    • Determining if you are subject to the tax.
    • Gathering the necessary information to file your UHT return.
    • Completing and filing your UHT return.
    • Representing you in any dealings with the Canada Revenue Agency (CRA).
    If you have any questions about the Underused Housing Tax, please contact CJCPA today.

    Additional Resources

    Disclaimer

    This blog is intended for informational purposes only. It doesn’t amount to any legal or tax advice. You should consult with a qualified tax advisor to discuss your specific circumstances.
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