The Underused Housing Tax: Cleaning Up 2022–2024 Before the File Closes
The Underused Housing Tax was repealed in March 2026 — but if you owned a second property through a trust, a bare trust, or a private corporation at any point in 2022, 2023, or 2024, you may still have a return to file and a penalty to avoid. This guide maps who still has exposure, what exemptions apply, and how to voluntarily disclose missed years before CRA finds them first.
Meet the owner this article is about
Owen, 58, lives in Toronto and owns a cottage on Lake Muskoka. He bought it in 2011 and put it in a family trust in 2019 to simplify succession. He has heard about the UHT twice, dismissed it both times — the cottage is "his family's, not vacant, not foreign-owned." Owen is actually an affected owner because of the trust. He should have filed UHT returns for 2022, 2023, and 2024. Each of those years almost certainly qualified for an exemption (personal use > 28 days, or designated vacation area), meaning he owes no tax — but the trustees still owe $2,000 per year in penalties if CRA finds unfiled returns. A voluntary disclosure now typically waives those penalties entirely.
The Short History: 4 Years, 3 Bills, 1 Repeal
The Underused Housing Tax Act came into force on January 1, 2022, aimed at foreign owners holding vacant Canadian homes. Congress drafted it so broadly that tens of thousands of ordinary Canadian families also got caught — anyone using a family trust, a bare trust, or a private corp for estate planning reasons was swept in. Two amending bills and eventually a repeal walked the scope back:
- Original Act (2022): Every non-excluded owner had to file Form UHT-2900, even if they owed zero tax. Penalty for missing the filing: $5,000 individual / $10,000 corporate, per property, per year.
- Bill C-69 (Budget 2024): Reclassified most Canadian private corporations, partnerships, and trusts as "excluded owners," effective for 2023 and later years. Penalty reduced to $1,000 / $2,000.
- Bill C-15 (Royal Assent March 26, 2026): Repealed the UHT for the 2025 calendar year and all following years. The 2022, 2023, and 2024 tax years remain enforceable.
Translation: no Canadian needs to file a UHT return for 2025, 2026, or beyond. But a lot of people still owe 2022, 2023, or 2024 returns — and the longer they sit unfiled, the longer the reassessment window stays open.
Who Had to File, and When
Tax year 2022
Yes — original UHT Act rules
Due date
Originally April 30, 2023. Extended multiple times; still open for voluntary filing.
Scope
Applies to all non-excluded owners, including most Canadian private corps, partnerships, and trustees.
Penalty if unfiled
$1,000 (individual) / $2,000 (corporation), reduced under Bill C-69.
Tax year 2023
Narrower — Bill C-69 reclassification
Due date
April 30, 2024.
Scope
Most Canadian-controlled private corporations, ordinary Canadian partnerships, and Canadian trusts are now excluded owners — no filing required.
Penalty if unfiled
$1,000 (individual) / $2,000 (corporation).
Tax year 2024
Narrower — same as 2023
Due date
April 30, 2025.
Scope
Last year under the narrower rules. Only non-resident owners, bare trustees, and a small subset of Canadian entities remain affected.
Penalty if unfiled
$1,000 (individual) / $2,000 (corporation).
Tax year 2025+
Eliminated
Due date
No filing required.
Scope
Bill C-15 (Royal Assent March 26, 2026) repealed the UHT effective for the 2025 calendar year and all years after.
Penalty if unfiled
None — the tax no longer exists.
Worst-Case Exposure Calculator
Estimates unfiled-return penalty at the post-C-69 corporate rate ($2,000/year). Add 1% UHT if no exemption applies.
1% UHT owed
$0
Unfiled-return penalty
$4,000
Total exposure
$4,000
A voluntary disclosure (VDP) almost always eliminates the penalty portion when the filer comes forward before any CRA contact.
Who Still Needs to File (for 2022, 2023, 2024)
Non-resident, non-Canadian individuals
The original target of the tax — foreign owners of vacant or underused Canadian residential property. Still pay 1% tax on taxable value unless an exemption applies.
Private corporations with > 10% foreign ownership
A Canadian-incorporated company is an excluded owner only if it is 90%+ owned by Canadian citizens or permanent residents. Foreign-owned private corps still file and pay.
Bare trustees of residential property
Even purely Canadian bare trusts — common for family-owned properties held in one name for two spouses — had to file a UHT return for 2022. Bill C-69 removed them from 2023 onwards unless the trust's beneficiaries include a non-resident or foreign-controlled entity.
Partnerships with non-resident or non-qualifying partners
An ordinary Canadian partnership of individuals is excluded from 2023 onwards. A partnership that includes a foreign partner, a non-qualifying corporation, or a trust with non-resident beneficiaries continues to file.
Six Exemptions That Reduce the Tax to Zero
If you are an affected owner, you still almost always owe $0 of UHT. The return is still required, but the tax itself is exempt if any one of these applies:
Primary residence
Property is your primary place of residence, your spouse's, or your common-law partner's.
Qualifying occupancy
At least 180 days of qualifying occupancy by an arm's-length tenant, spouse, parent, or child (at fair rent).
Not suitable for year-round use
Seasonal cottages without winter access or utilities qualify.
Uninhabitable
Destroyed, undergoing major renovation (≥ 120 continuous days), or under construction.
Vacation property in eligible area
Located in a rural area (based on CRA's designated postal codes) and used personally ≥ 28 days a year.
New owner
You acquired the property in the current calendar year and did not own it in any of the previous 9 years.
Voluntary Disclosure: How to Clean Up Missed Years
The CRA Voluntary Disclosures Program (VDP) accepts late UHT returns and generally waives the unfiled-return penalty if three conditions are met: the disclosure is voluntary (no CRA contact yet), complete (covers every open year), and more than a year overdue (2022 and 2023 qualify; 2024 will qualify after April 30, 2026).
List every residential property held in 2022, 2023, or 2024 by a trust, a bare-trust arrangement, a non-CCPC-qualifying corp, or a partnership with any non-individual partner.
For each property-year, determine which exemption applies (see list above). Most family cottages and principal-use homes qualify; document the 28-day personal use or 180-day qualifying occupancy evidence now while memory is fresh.
Prepare Form UHT-2900 for each property × each unfiled year. CRA accepts paper or My Account filing. Keep exemption documentation with your records for 6 years.
File through the VDP (Form RC199) or — for clean cases with an exemption — file directly and request penalty relief under the Taxpayer Relief provisions. The direct route is faster and usually works for family cottage cases.
For 2025 and later: nothing. The tax no longer exists. Make sure your ongoing tax-return checklist no longer includes UHT.
The Bottom Line
For Owen and his Muskoka family trust, the UHT was never actually going to cost him 1% of the cottage's value — the vacation-area and personal-use exemptions cover him clean. But the unfiled-return penalty is a flat $2,000 per year per property, and it bites whether tax is owed or not. A clean voluntary filing of 2022, 2023, and 2024 — three forms, three exemption codes, zero tax — puts the whole saga to bed. Do it before CRA sends the letter and the penalty issue evaporates.
See how properties, trusts, and corps feed into your retirement picture