The real estate market can be very profitable, but it’s crucial that you understand the pertinent laws. Everywhere in the globe, property owners are required to pay a certain amount in taxes. Some individuals might believe that there is no tax if you purchase real estate but never use it. But nothing could be further from the reality than that. Canada declared a new levy for this industry in 2022. You should be aware of the potential taxation before purchasing a property, regardless of whether you intend to reside there or purchase it as an investment.
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The Underused Housing Tax Explained
The UHT is a tax on underused properties in Canada that are owned by non-residentials. These can be residential buildings that are either vacant or people don’t stay there for a longer period of time. The tax was applied on 1st January 2022, but it is also applied to the properties that were bought before this time.
Are You Eligible To Pay The Underused Housing Tax?
Not everyone is supposed to pay this tax, as you will see below.
- Canadian citizens or permanent residents
- If you are a trustee of a residential property
- Registered charities
- Publicly traded businesses that have under 10% shares owned by non-residents.
- Cooperating housing corporations for Canadian HST/GST aims
- Indigenous governing bodies
Now let’s take a look at the people who have to pay UHT.
- Non-Canadian citizens and permanent residents
- Corporations without any share capital
- Corporations incorporated outside the country
- Permanent residents who are trustees of a property.
- Private companies whose shares are not traded publicly.
Rules For Filing The Underused Housing Tax
It is crucial for all homeowners to know about the rules of the new housing tax. You have to file your UHT before 30th April. If your property is owned by multiple people, then depending on the ownership percentage, you will all have to file the UHT returns individually. Owners who have an ownership percentage lower than 10% are not eligible to file individual UHT return.
The reason that you need to know about the rules is to protect yourself from getting a penalty. If you don’t pay your taxes, you can be penalized with a fine and if you keep avoiding it, then in some cases your property might also be sealed.
When you are filing your UHT return, you should ensure that you have completed all the important requirements; otherwise, you might have to file it again if there are any discrepancies. Also, ensure that you don’t lie on the forms.
That was everything you needed to know about the UHT. If you are eligible for the tax, make sure that you follow the guidelines and pay the tax on time to protect yourself from getting penalized with a fine. One thing of note is that even if you are exempt, you must still file the return.