Special Rule and Elections for Individual Owners of Multiple Residential Properties
Underused Housing Tax Notice UHTN8
February 2023
This notice supplements Underused Housing Tax Notice UHTN6, Exemption for Primary Place of Residence, and Underused Housing Tax Notice UHTN7, Exemption for Qualifying Occupancy. Please read those notices carefully before reading this notice.
If you are an owner of multiple residential properties (or if between you and your spouse or common-law partner you are owners of multiple residential properties), your eligibility for the exemptions for primary place of residence and qualifying occupancy may be impacted.
The purpose of this notice is to explain the impact that owning multiple residential properties can have on your eligibility for these exemptions. It also explains how to file an election to designate one of the multiple residential properties for the exemptions for a calendar year.
Except as otherwise noted, all statutory references in this publication are to the provisions of the Underused Housing Tax Act (UHTA) and its regulations. The information in this publication does not replace the law found in the UHTA and its regulations.
Table of Contents
Overview
The Government of Canada has introduced an underused housing tax on the ownership of vacant or underused housing in Canada. The Underused Housing Tax Act (UHTA), which governs the underused housing tax, received royal assent on June 9, 2022. The underused housing tax took effect on January 1, 2022.
The underused housing tax
If you are an affected owner of a residential property on December 31 of a calendar year, you have to pay the underused housing tax for the residential property for the calendar year, unless your ownership of the residential property is exempt from the tax for the calendar year.
Where certain conditions are met, your ownership of a residential property may be exempt from the underused housing tax if the property is any of the following:
- a vacation property that is located in an eligible area of Canada
- used as a primary place of residence or for qualifying occupancy
- not suitable for year-round use
- seasonally inaccessible
- uninhabitable during the calendar year
- newly constructed
Your ownership of a residential property may also be exempt if you are any of the following:
- a partner of a specified Canadian partnership, a trustee of a specified Canadian trust, or a specified Canadian corporation
- a new owner
- a deceased individual, or their personal representative or co-owner
For more information about the above exemptions, refer to the various Underused housing tax notices.
Even if your ownership of a residential property is exempt from the underused housing tax for a calendar year, as an affected owner, you still have to file a return for the residential property using Form UHT-2900, Underused Housing Tax Return and Election Form.
There are significant penalties if you fail to file an annual return when it is due. Affected owners who are individuals are subject to a minimum penalty of $5,000. Affected owners that are corporations are subject to a minimum penalty of $10,000. For more information, refer to Underused Housing Tax Notice UHTN3, Filing a Return and Paying the Underused Housing Tax.
For an explanation of affected owner, dwelling unit, owner and residential property, and to determine whether the underused housing tax applies to you, refer to Underused Housing Tax Notice UHTN1, Introduction to the Underused Housing Tax.
Special rule if there are multiple residential properties
The information in this notice is applicable only to affected owners who are individuals.
The exemptions for primary place of residence and qualifying occupancy (that is, for Type 2 qualifying occupants) are intended for the personal occupancy of a residential property by an affected owner or members of their family. However, an affected owner cannot qualify for either of the exemptions for their, or some members of their family’s, personal occupancy of more than one residential property. Therefore, a special rule is in place to deal with the exemptions where there are multiple residential properties owned by either an affected owner or between an affected owner and their spouse or common-law partner. The special rule includes an election to designate one of the multiple residential properties for the exemptions for a calendar year.
How to determine if the special rule applies to you
The special rule applies to you for a calendar year if, on December 31 of the calendar year, all of the following conditions are met:
- you are an owner of a particular residential property
- you are an individual who is not a citizen or permanent resident of Canada
- either (or both) of the following apply:
- you are an owner of one or more other residential properties
- your spouse or common-law partner is not a citizen or permanent resident of Canada and is an owner of one or more other residential properties
What happens if the special rule applies to you
Impact on the exemption for primary place of residence
If the special rule applies to you for a calendar year, the exemption for primary place of residence generally cannot be claimed by you (or by your spouse or common-law partner who is not a citizen or permanent resident of Canada) for any of your residential properties for the calendar year, unless a valid election is filed with the Canada Revenue Agency (CRA). This includes any residential property in which a dwelling unit is occupied by your child (or your spouse’s or common-law partner’s child) while pursuing authorized study at a designated learning institution.
For more information, refer to the Election required to qualify for exemptions section in this notice.
Impact on the exemption for qualifying occupancy (for certain Type 2 qualifying occupants)
If the special rule applies to you for a calendar year, the exemption for qualifying occupancy generally cannot be claimed by you (or by your spouse or common-law partner who is not a citizen or permanent resident of Canada) for your (or your spouse’s or common-law partner’s) personal occupancy of any of your residential properties for the calendar year, unless a valid election is filed with the CRA. In the absence of a valid election, this means that for every residential property of which you (or your spouse or common-law partner) are an owner, a qualifying occupancy period for your ownership of the residential property does not include any period in the calendar year during which either of the following applies:
- you (or your spouse or common-law partner) have continuous occupancy of a dwelling unit while pursuing authorized work under a Canadian work permit
- your spouse or common-law partner, who is a citizen or permanent resident of Canada, has continuous occupancy of a dwelling unit
It is only your (and your spouse’s or common-law partner’s) personal occupancy that is excluded under the special rule. The special rule has no impact on whether a period during which another Type 2 qualifying occupant (such as your parent or child who is a citizen or permanent resident of Canada) has continuous occupancy of a dwelling unit is a qualifying occupancy period for your ownership of a residential property.
However, it is possible that your (or your spouse’s or common-law partner’s) personal occupancy of a dwelling unit may still be considered for the exemption for qualifying occupancy (that is, for Type 2 qualifying occupants). For more information, refer to the Election required to qualify for exemptions section in this notice.
The special rule has no impact on whether a period during which a Type 1 qualifying occupant has continuous occupancy of a dwelling unit is a qualifying occupancy period for your ownership of a residential property.
For more information on Type 1 and Type 2 qualifying occupants, refer to Underused Housing Tax Notice UHTN7, Exemption for Qualifying Occupancy.
Election required to qualify for exemptions
If the special rule applies to you for a calendar year, you may still qualify for the exemption for primary place of residence or qualifying occupancy (that is, for certain Type 2 qualifying occupants).
Depending on the ownership of the multiple residential properties, you may file an election (or you and your spouse or common-law partner may file a joint election) with the CRA to designate one of the multiple residential properties for the exemptions for the calendar year. By designating one residential property in the election, you are declaring the following:
- only that one residential property can qualify for the exemption for primary place of residence
- your (or your spouse’s or common-law partner’s) personal occupancy of a dwelling unit in only that one residential property can be considered for the exemption for qualifying occupancy (that is, for certain Type 2 qualifying occupants)
You can file only one election for a calendar year and you can designate only one residential property in the election. You cannot designate different residential properties for the two exemptions.
If you file an election, it is due by April 30 of the following calendar year. When the due date for an election falls on a Saturday, Sunday or a public holiday recognized by the CRA, the election is on time if the CRA receives it on the next business day. For example, since April 30, 2023, falls on a Sunday, your election is on time if the CRA receives it on May 1, 2023.
Owner files an election
You may file an election if, on December 31 of a calendar year, both of the following conditions are met:
- you are an individual who is not a citizen or permanent resident of Canada and you are an owner of two or more residential properties
- if you have a spouse or common-law partner, they are either of the following:
- a citizen or permanent resident of Canada
- not a citizen or permanent resident of Canada and not an owner of a residential property
Example 1
Individual A and Individual B are spouses. Neither they nor their children are citizens or permanent residents of Canada. Their primary place of residence is outside Canada.
Individual A is the only person identified in the land registration system as an owner of a property in Victoria (a detached house) that they purchased in 2017.
Generally, Individual A, Individual B and their children use the property as a vacation home in June, July, August, September and December every year. Although the house is suitable for year-round use as a place of residence and is accessible throughout the year, it is unoccupied the remainder of the year. The Victoria property is not located in an eligible area for purposes of the exemption for vacation properties.
Individual A purchased another property in Vancouver (a residential condominium unit) in late 2021. Individual A is the only person identified in the land registration system as an owner of the property. The Vancouver property is not located in an eligible area for purposes of the exemption for vacation properties.
Neither Individual A nor Individual B is an owner of any other residential properties in Canada.
In late 2021, Individual A receives a Canadian work permit that authorizes them to work for an employer in Vancouver for a nine-month period from January 1 to September 30, 2022. To be closer to Individual A, Individual B and their children spend all of July and August 2022 at the Victoria property.
In 2022, Individual A has continuous occupancy of the Vancouver property from January 1 to September 30 and occupies the property while working in Vancouver under the work permit. Individual A leaves Vancouver on the weekends in July and August to spend time with their family in Victoria.
For each calendar month in the nine-month period from January 1 to September 30, 2022, Individual A occupies the Vancouver property for a greater number of days than the number of days they occupy any other place. No one occupies the Vancouver property while Individual A visits their family in Victoria.
Election filed
The special rule applies to Individual A for the 2022 calendar year because they are an individual who is not a citizen or permanent resident of Canada and they are an owner of multiple residential properties. Generally, this means that unless an election is filed with the CRA, both of the following apply:
- the exemption for primary place of residence cannot be claimed by Individual A for either the Victoria property or the Vancouver property for the calendar year
- any personal occupancy of either the Victoria property or the Vancouver property by Individual A or Individual B cannot be considered for the exemption for qualifying occupancy (that is, for Type 2 qualifying occupants) for the calendar year
However, in April 2023, Individual A files an election with the CRA to designate the Vancouver property (that is, one of their multiple residential properties) for the exemptions for primary place of residence and qualifying occupancy for the 2022 calendar year. By designating the Vancouver property in the election, Individual A is declaring both of the following:
- only the Vancouver property can qualify for the exemption for primary place of residence
- only in the Vancouver property can Individual A’s or Individual B’s personal occupancy be considered for the exemption for qualifying occupancy (that is, for Type 2 qualifying occupants)
Although Individual A designates the Vancouver property for the two exemptions for the 2022 calendar year, Individual A is only eligible to claim one of the exemptions.
With respect to the exemption for primary place of residence, the Vancouver property does not qualify because Individual A’s primary place of residence is outside Canada.
With respect to the exemption for qualifying occupancy, the period from January 1 to September 30, 2022, is a qualifying occupancy period for Individual A’s ownership of the Vancouver property. It is a period of at least one month in the 2022 calendar year during which a Type 2 qualifying occupant (that is, an owner who occupies the property to pursue authorized work under a Canadian work permit) has continuous occupancy of the property. There are 273 days in the qualifying occupancy period for Individual A’s ownership of the property in the 2022 calendar year.
Vancouver property
Individual A has to file a return for the Vancouver property for the 2022 calendar year by April 30, 2023.
Individual A does not have to pay the underused housing tax for their 100% ownership percentage of the Vancouver property for the 2022 calendar year. They are eligible to claim the exemption for qualifying occupancy because both of the following conditions are met:
- Individual A filed an election with the CRA to designate the Vancouver property (that is, one of their multiple residential properties) for the exemptions for primary place of residence and qualifying occupancy (that is, for Type 2 qualifying occupants) for the 2022 calendar year
- there are at least 180 days in the 2022 calendar year that are included in the qualifying occupancy period for Individual A’s ownership of the Vancouver property
Victoria property
Individual A has to file a return for the Victoria property for the 2022 calendar year by April 30, 2023.
By designating the Vancouver property in the election, Individual A’s ownership of the Victoria property cannot qualify for the exemption for primary place of residence for the 2022 calendar year (even if it was, in fact, their primary place of residence). Similarly, any personal occupancy of the Victoria property by Individual A or Individual B cannot be considered for the exemption for qualifying occupancy (that is, for Type 2 qualifying occupants) for the 2022 calendar year.
Where Individual A’s ownership of the Victoria property does not qualify for any other exemption, Individual A has to pay the underused housing tax for their 100% ownership percentage of the Victoria property for the 2022 calendar year. Individual A has to pay the tax by April 30, 2023.
Owners file a joint election
You and your spouse or common-law partner may file a joint election if, on December 31 of a calendar year, both of the following conditions are met:
- you are an individual who is not a citizen or permanent resident of Canada and you are an owner of one or more residential properties
- your spouse or common-law partner is not a citizen or permanent resident of Canada and is an owner of one or more residential properties
The election is applicable only in situations where between you and your spouse or common-law partner you are owners of multiple residential properties. If you and your spouse or common-law partner own only one residential property between the two of you, the special rule does not apply and no joint election needs to be filed.
Example 2
Individual C and Individual D are spouses who are not citizens or permanent residents of Canada. Their primary place of residence is outside Canada.
Individual C and Individual D jointly purchased a property in Toronto (a residential condominium unit) in 2020. Each of the individuals is identified in the land registration system as having 50% ownership of the property.
Individual C and Individual D’s oldest child, who is also not a citizen or permanent resident of Canada, has lived at the Toronto property full time since September 2020 when they started studying under a study permit at a Canadian university that is a designated learning institution. The child regularly receives mail at the property, pays for utilities and internet services and keeps all of their valuable and most-used personal effects at the property. Although the child returns to their parents’ home outside Canada once a year for a short visit, the child intends to continue using the property as their primary place of residence until they graduate in 2024. No one occupies the property when the child visits their parents outside Canada.
Individual C and Individual D jointly purchased another property in Ottawa (a rowhouse unit) in 2021. Each of the individuals is identified in the land registration system as having 50% ownership of the property.
Individual C and Individual D’s youngest child, who is also not a citizen or permanent resident of Canada, has lived at the Ottawa property full time since September 2021 when they started studying under a study permit at a Canadian university that is a designated learning institution. The child regularly receives mail at the property, pays for utilities and internet services and keeps all of their valuable and most-used personal effects at the property. Although the child returns to their parents’ home outside Canada once a year for a short visit, the child intends to continue using the property as their primary place of residence until they graduate in 2025. No one occupies the property when the child visits their parents outside Canada.
Neither Individual C nor Individual D is an owner of any other residential properties in Canada.
Joint election filed
The special rule applies to both Individual C and Individual D for the 2022 calendar year because each is an individual who is not a citizen or permanent resident of Canada and, between them, they are owners of multiple residential properties. Generally, this means that unless a joint election is filed with the CRA, both of the following apply:
- the exemption for primary place of residence cannot be claimed by Individual C or Individual D for either the Toronto property or the Ottawa property for the calendar year
- any personal occupancy of either the Toronto property or the Ottawa property by Individual C or Individual D cannot be considered for the exemption for qualifying occupancy (that is, for Type 2 qualifying occupants) for the calendar year
However, in April 2023, Individual C and Individual D file a joint election with the CRA to designate the Ottawa property (that is, one of their multiple residential properties) for the exemptions for primary place of residence and qualifying occupancy for the 2022 calendar year. By designating the Ottawa property in the election, Individual C and Individual D are declaring both of the following:
- only the Ottawa property can qualify for the exemption for primary place of residence
- only in the Ottawa property can Individual C’s or Individual D’s personal occupancy be considered for the exemption for qualifying occupancy (that is, for Type 2 qualifying occupants)
Although Individual C and Individual D jointly designate the Ottawa property for the two exemptions for the 2022 calendar year, they are only eligible to claim one of the exemptions.
With respect to the exemption for primary place of residence, the Ottawa property qualifies because it is the primary place of residence of their child who occupies the property while pursuing authorized study at a designated learning institution.
With respect to the exemption for qualifying occupancy (that is, for Type 2 qualifying occupants), the Ottawa property does not qualify because of the following:
- neither Individual C nor Individual D occupy the property to pursue authorized work under a Canadian work permit
- their child who occupies the property does not meet the condition of being a citizen or permanent resident of Canada
Ottawa property
Individual C and Individual D each have to file a separate return for the Ottawa property for the 2022 calendar year by April 30, 2023.
Neither individual has to pay the underused housing tax for their respective 50% ownership percentage of the Ottawa property for the 2022 calendar year because both of the following conditions are met:
- Individual C and Individual D filed a joint election with the CRA to designate the Ottawa property (that is, one of their multiple residential properties) for the exemptions for primary place of residence and qualifying occupancy (that is, for Type 2 qualifying occupants) for the 2022 calendar year
- the Ottawa property is the primary place of residence of an owner’s child who occupies the property while pursuing authorized study at a designated learning institution
Toronto property
Individual C and Individual D each have to file a separate return for the Toronto property for the 2022 calendar year by April 30, 2023.
By designating the Ottawa property in the election, Individual C’s and Individual D’s respective ownership of the Toronto property cannot qualify for the exemption for primary place of residence for the 2022 calendar year. Similarly, any personal occupancy of the Toronto property by Individual C and Individual D cannot be considered for the exemption for qualifying occupancy (that is, for Type 2 qualifying occupants) for the 2022 calendar year.
Where Individual C’s and Individual D’s ownership of the Toronto property does not qualify for any other exemption, they each have to pay the underused housing tax for their respective 50% ownership percentage of the Toronto property for the 2022 calendar year. They have to pay the tax by April 30, 2023.
How to file the election
You may make the election (including the joint election) for a residential property in your return filed for the residential property using Form UHT-2900.
Keeping records
Every affected owner of a residential property must keep records to enable the determination of their obligations and liabilities under the UHTA. Generally, you must keep the records for six years from the end of the year to which they relate.
If you do not have adequate records to support that your ownership of a residential property is exempt from the underused housing tax for a calendar year, the CRA may disallow your exemption.
Further information
For all technical publications related to the UHTA, go to Underused housing tax technical information.
For general enquiries about the underused housing tax, call the applicable telephone number:
- if you are calling about a residential property that is owned by an individual and you are calling from:
- within Canada or the United States, call 1‑800‑959‑8281
- outside Canada and the United States, call 613‑940‑8495 (collect calls accepted)
- if you are calling about a residential property that is owned by a corporation and you are calling from:
- within Canada or the United States, call 1‑800‑959‑5525
- outside Canada and the United States, call 613‑940‑8497 (collect calls accepted)
To request a ruling or an interpretation related to the application of the underused housing tax, write to:
GST/HST Rulings Directorate
Canada Revenue Agency
Place de Ville Tower A 5th floor
320 Queen St
Ottawa ON K1A 0L5
Canada
Fax: 1‑418‑566‑0319
Refer to GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service , which explains the rulings and interpretations service offered by the Canada Revenue Agency.
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