Good news for US owners of Canadian homes. The federal Underused Housing Tax (UHT), a 1% annual tax on vacant or underused residential property owned mainly by non-resident non-Canadians, is being eliminated. Budget 2025, tabled on 4 November 2025, proposed that no UHT be payable and no returns be filed for 2025 and later calendar years (Crowe Soberman).
What the change does
- 2025 onward: no UHT and no UHT return, including for Canadians who previously had to file because they owned through a trust, corporation or partnership
- 2022 to 2024: the old rules still apply, including penalties and interest for late or missed filings (BDO)
- Provincial and municipal taxes are unaffected: BC's Speculation and Vacancy Tax, Toronto's Vacant Home Tax and similar levies continue
McMillan notes the change was introduced through the Notice of Ways and Means Motion that accompanied the budget. The repeal became law when Bill C-15 received Royal Assent on 26 March 2026.
Why lenders should care
Unpaid UHT for 2022–2024, with penalties, is a federal tax debt of the property owner. When you lend to or against a US-owned Canadian residential property, ask whether the owner filed for those years and whether any balance is outstanding. The same diligence applies to provincial and municipal vacancy taxes, which can be added to property tax arrears in some cities.
Your quick checklist
- Ask non-Canadian borrowers for 2022–2024 UHT filing confirmations
- Check provincial and municipal vacancy tax status for the property
- Update your Canadian lending checklist to remove UHT for 2025 and later
This content is general information for industry professionals and is not legal, tax or financial advice. Laws change and apply differently to each transaction; obtain advice from qualified counsel in each relevant jurisdiction. Legal counsel to the Cross-Border Private Lenders Association: Jasmine Daya & Co. Questions: info@cbpla.com