The Federal Underused Housing Tax Is Gone: What Still Applies (2026)
Canada’s 1% Underused Housing Tax was eliminated for the 2025 calendar year onward. Returns for 2022 to 2024 are still owed. What changed, and what remains.
The Underused Housing Tax, a 1% annual federal tax on vacant or underused residential property owned mainly by non-Canadians, was eliminated for the 2025 calendar year onward. The legislation received Royal Assent on 26 March 2026. No UHT return or payment is required for 2025 or any later year. Returns and tax for 2022, 2023 and 2024 remain due; the 2024 return was due 30 April 2025. Provincial and municipal vacancy taxes in BC, Vancouver, Toronto, Ottawa and Hamilton are unaffected and still apply.
The CostToClose vacant home tax calculator no longer includes the UHT.
What the tax was
Introduced for 2022, the UHT charged 1% of a residential property's value (the greater of assessed value and most recent sale price, or a fair-market election) when the owner was an "affected owner" (chiefly foreign nationals, foreign corporations and certain trusts and partnerships) and no exemption applied. Exemptions covered primary residences, properties rented for at least 180 days a year, seasonal and inaccessible properties, new construction and several others. Affected owners had to file a return (UHT-2900) even when exempt, with penalties of at least $1,000 for individuals and $2,000 for corporations for not filing.
Canadian citizens and permanent residents owning directly were "excluded owners" and never had to file. From 2023 the excluded category was widened to specified Canadian corporations, partnerships and trusts.
Why it was eliminated
Budget 2025 removed the tax, citing collection costs that approached the revenue raised and the overlap with provincial and municipal vacancy taxes that were more effective at targeting empty homes. The measure was enacted in March 2026 and applies from the 2025 calendar year.
What still applies
| Tax | Who | Rate | Status |
|---|---|---|---|
| Federal Underused Housing Tax | Affected (mostly foreign) owners | 1% | Eliminated for 2025+; 2022–2024 obligations remain |
| BC Speculation and Vacancy Tax | Owners in designated BC regions | 1% Canadians / 3% foreign (2026); 4% foreign from 2027 | In force |
| Vancouver Empty Homes Tax | Vancouver properties vacant 6+ months | 3% | In force |
| Toronto Vacant Home Tax | Toronto properties vacant 6+ months | 3% | In force |
| Ottawa Vacant Unit Tax | Ottawa | 1% | In force |
| Hamilton Vacant Unit Tax | Hamilton | 1% | In force |
Sources: Department of Finance Canada; CRA; Government of BC; City of Vancouver; City of Toronto; City of Ottawa; City of Hamilton. Checked 14 September 2026.
If you still owe for 2022–2024
Affected owners who never filed for those years should file now. CRA waived penalties and interest for 2022 returns filed by 30 April 2024, but not afterward; late 2023 and 2024 returns carry the minimum penalties above. Filing is done through CRA My Account or on paper with Form UHT-2900; tax is 1% of the property's value for each year no exemption applied.
Worked example
A US resident owned a Toronto condo worth $620,000, left empty, from 2022 through 2026:
| Year | Federal UHT | Toronto VHT (if vacant and no exemption) |
|---|---|---|
| 2022 | $6,200 | $6,200 (1%) |
| 2023 | $6,200 | $6,200 (1%) |
| 2024 | $6,200 | $18,600 (3%) |
| 2025 | $0 — eliminated | $18,600 |
| 2026 | $0 | $18,600 |
The federal tax was never the larger bill for a Toronto owner; the municipal one is. Reproduce the municipal figure.
Frequently asked questions
Is the Underused Housing Tax still in effect?
No. It was eliminated for the 2025 calendar year onward, with the enacting legislation receiving Royal Assent on 26 March 2026.
Do I still need to file a UHT return?
Not for 2025 or later. If you were an affected owner in 2022, 2023 or 2024 and did not file, those returns are still required.
Did Canadian citizens ever have to pay the UHT?
Canadian citizens and permanent residents owning directly were excluded and never had to file. Some Canadian-controlled corporations, trusts and partnerships had to file for 2022 only.
Which vacancy taxes still apply in Canada?
BC's speculation and vacancy tax, Vancouver's empty homes tax, and the vacant home taxes in Toronto, Ottawa and Hamilton. Each has its own annual declaration.
Will the UHT come back?
There is no announced plan to reinstate it. Provinces and cities, not the federal government, now handle vacancy taxation.
Sources
- Department of Finance Canada, Budget 2025 — elimination of the Underused Housing Tax — checked 14 Sept 2026
- Canada Revenue Agency, Underused Housing Tax — 2022 to 2024 filing requirements — checked 14 Sept 2026
- Government of British Columbia, Speculation and Vacancy Tax 2026 rates — checked 14 Sept 2026
- City of Toronto, Vacant Home Tax; City of Vancouver, Empty Homes Tax; City of Ottawa and City of Hamilton, Vacant Unit Tax — checked 14 Sept 2026
This is general information for Canadian home buyers and sellers, checked against the sources listed above on the date shown, and it is not legal, tax, or mortgage advice. Rules and rates change, so confirm current figures with your lawyer or notary, your lender, or the government office that administers the tax before relying on them.