Underused Housing Tax (UHT) List of Exemptions

This article is part of a series on the new Underused Housing Tax (UHT). Please refer to our previous article for more information.

What exemptions are available to claim on a UHT return?

A number of exemptions are available, which are based on factors such as the condition of the property, the use of the property, the capacity in which the person is an “owner” of the property, the length of ownership, etc.

Property Exemptions

Certain residential property is exempt from the UHT, including property that is:

1. Residential property that’s used as a place of residence or lodging by the owner or the spouse or common law partner for 28 days or more in the calendar year, and that’s located in an eligible area of Canada, that is either:
   • not in a census metropolitan area, nor within a specified census agglomeration, as determined by the last census before the calendar year; or,
   • not within a population centre determined by the last census before the calendar year
2. Used as a primary place of residence by the owner, the individual’s spouse or common law partner, or a child if the child occupies the residential property for authorized study at a designated learning institution. This exception doesn’t apply where the individual or their spouse aren’t Canadian citizens or permanent residents, and they own individually or together multiple residential properties (other than in respect of one of the residential properties that they jointly elect for the exception to apply).
3. If the number of days included in a ‘qualifying occupancy period’ in respect of the residential property is 180 days or more in the calendar year.
   • A qualifying occupancy period is defined to mean a period of at least one month in the calendar year during which one of the following individuals (other than an ‘excluded individual’, who is an individual who is not a citizen nor permanent resident and who owns multiple residential properties, unless the individual and spouse jointly elect the property to be excluded) has continuous occupancy of a dwelling unit in the residential property:
     • a) an individual who deals at arm’s length with the owner and with the spouse or common law partner and was given continuous occupancy under an agreement in writing;
     • b) an individual who doesn’t deal at arm’s length with the owner and with the spouse or common law partner and was given continuous occupancy under an agreement in writing and who pays rent that is not below the ‘fair rent’ for the residential property (defined to mean the amount that is 5% of the taxable value in respect of the residential property for the year);
     • c) an individual who is the owner or the owner’s spouse or common law partner who is in Canada for the purpose of pursuing authorized work under a Canadian work permit; or,
     • d) an individual who is a spouse, common law partner, parent or child of the owner and who is a citizen or permanent resident
   • A qualifying occupancy period doesn’t include a period if the only individuals who have occupancy are the owner, spouse, common law partner, parent or child of the owner if each of those individuals resides or lodges at a place other than the residential property for a greater number of days than the number of days they reside or lodge at the residential property
4. Not suitable for year-round use as a residence;
5. Seasonally inaccessible because public access is not maintained year-round;
6. Uninhabitable during the calendar year for a minimum period of at least 60 consecutive days because of a disaster or hazardous condition;
7. A dwelling unit that is part of a residential property that is uninhabitable during the calendar year for a minimum period of 120 consecutive days as a result of a renovation carried on without undue delay, and this exception didn’t apply to the property in any of the 9 prior calendar years;
8. A newly constructed residential property that was not complete before April 30 of the particular calendar year (i.e., completion was on or after April 30 of the current calendar year); or,
9. A newly constructed residential property which was completed in January, February or March of the particular calendar year, that was offered for sale to the public and was never occupied by an individual as a place of residence during the calendar year

Owner Exemptions

In addition, the following owners generally would not be liable for the UHT:

1. Certain partners of a ‘specified Canadian partnership’, certain trustees of a ‘specified Canadian trust’ or a ‘specified Canadian corporation’, as defined in the UHT rules;
2. A person who became a new owner in the calendar year and who wasn’t a previous owner of the residential property in the 9 prior calendar years; or,
3. A deceased individual who was an owner of the residential property in the calendar year or preceding calendar year, or their personal representative or co-owner (where the deceased owned at least 25% of the property)

A return must be filed to claim any of these exemptions, so talk to your DMCL advisor to determine if you are eligible for an exemption, and to get help with preparing your UHT return.