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[BUYING AND SELLING REAL ESTATE IN CANADA - ONTARIO]
will be set in rules that will be presented for consultation in draft legislation. XVIII. UNDERUSED HOUSING TAX ACT Effective January 1, 2022, the Underused Housing Tax Act was introduced by the Government of Canada. This act requires individuals who are not Canadian citizens nor permanent residents of Canada who own residential property in Canada on December 31 of a calendar year, and which property is vacant or "underused" – to file an annual tax return and pay a tax of 1% of a residential property’s value (the “ UHT ”), annually. Under the UHT legislation, residential property includes detached, semidetached, townhomes and similar separate residential dwellings. Generally, a residential property is considered underused if it is not continuously occupied for 180 days or more in a calendar year. Exemptions can include vacation property in rural areas held for personal use for a minimum of 4 weeks/year, and not suitable or accessible for year-round occupancy; property uninhabitable due to disaster or hazardous conditions; property undergoing major renovations; property held in the year of death; or property acquired during the calendar year.
XIX. VACANT HOME TAX (TORONTO, OTTAWA & VANCOUVER) Toronto and Ottawa introduced new vacant home taxes which began to take effect in January 2023, and which developed after the empty homes tax regime implemented in Vancouver in 2017. Unlike the federal Underused Housing Tax Act , the vacant home tax payments are not limited to owners who are non-citizens or non-permanent residents of Canada, but rather apply to all owners of residential properties in Toronto and Ottawa. In Toronto, the Vacant Home Tax (VHT) is an annual tax that will be imposed on vacant Toronto residences. A property will be considered vacant if it was not used as the principal residence by the owner(s) or any permitted occupant(s), or if it was not occupied by tenants for a total of 6 months or more during the previous calendar year. Similarly in Ottawa, there is a Vacant Unit Tax (VUT) which applies to non-principal residences vacant in 2022 for at least 184 days. A unit will be considered vacant if it is not used as a principal residence and has been unoccupied for more than 184 days in the previous calendar year. Notably, the tax applies only to properties in the residential tax class – excluding commercial, industrial, and multi- residential properties.
ILN Real Estate Group – Buying and Selling Real Estate Series
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