If you are a real estate developer who did not sell all of its condominium units as of December 31, 2022, you may be required to file an Underused Housing Tax return (UHT Return) by October 31, 2023, for each condominium unit (that qualifies as a “residential property”) you owned as of December 31, 2022. This applies even if no Underused Housing Tax (UHT) is payable. Failure to comply may result in penalties of $5,000 for individuals and $10,000 for non-individuals such as corporations.

What is considered a "residential property"?

Under the Underused Housing Tax Act (Act), the term “residential property” is defined to notably include rowhouse units and residential condominium units that are, or are intended to be, separate parcels or other divisions of real or immovable property owned, or intended to be owned, apart from any other units in the building. It does not include, however, a detached house or a similar building containing more than three dwelling units.

Based on this definition, a high-rise apartment building, where the various units are not separate parcels or other divisions of real or immovable property, would not fall under the definition of “residential property.” Similarly, a high-rise apartment building without distinct units may not qualify as a “residential property.” However, if such a building consists of separate condominium units with their own land registry number, each of those units may be considered a "residential property" for UHT purposes. This distinction is of particular importance for real estate developers who remained the owner of unsold units of their project as of December 31, 2022.

Who must file the UHT Return?

In most cases, individuals who are Canadian citizens or permanent residents, as well as Canadian corporations listed on a Canadian stock exchange, are exempt from filing a UHT Return for their residential properties. However, private Canadian corporations, certain partners of a partnership and certain trustees of a trust, among others, are generally not exempt and must submit a UHT Return even if no UHT is payable.

It should be noted that the UHT Return must be filed by the “owner” as defined in the Act. “Owner” typically refers to the person who is identified as such under the land registration system or other similar system application where the residential property is located, or who could reasonably be considered an “owner” based on such a system.