New Underused Housing Tax Rules
On June 9, 2022, the Government of Canada introduced the new Underused Housing Tax (UHT) that affects certain residential property owners as of December 31, 2022. Owners who must submit a UHT return are called affected owners. Owners who do not need to submit a UHT return are called excluded owners. If you consult a tax accountant, use tax services, or handle Income Tax Filing, these updates are important. You may feel honored when asked to act as someone’s executor or trustee, but once responsibilities begin it quickly becomes clear how large the task is. The UHT adds another complexity to the process.
Who Is the Property Owner
We consulted the CRA UHT technical division on March 15, 2023, for additional guidance about different stages of ownership an estate may encounter and key questions that arise. For UHT purposes, the owner of a residential property is shown by the name listed on the land title registry on December 31. Depending on timing and estate procedures, the property of the deceased person could be held by a deceased individual, the personal representative of a deceased individual, or the personal representative acting as a trustee of a testamentary trust stated in the will. As executor or administrator of the estate, you may have UHT filing obligations in each case, and a Tax Accountant can assist with proper Income Tax Filing.
Personal Representative and Trustee Details
If a person was an excluded owner during their lifetime, they remain an excluded owner after death and do not need to file a UHT return. If an affected owner is still on the property title, they remain an affected owner. A personal representative meeting the UHT Act definition is not considered a trustee of a trust. When the title is transferred to the personal representative, they become the owner while holding the title. If the personal representative is a Canadian citizen or permanent resident, they are treated as an excluded owner and do not need to file. If they are an affected owner, they must submit a UHT return. These rules highlight why professional Tax Services and accurate Income Tax Filing are essential.
Exemptions and Important Dates
The CRA confirmed that there is no specific period when a property held by a personal representative is considered held by a trustee. If a will creates a testamentary trust and the personal representative serves as both trustee and executor, the CRA regards the executor’s responsibilities as complete once the property title transfers from the deceased owner to the personal representative. From that point, the personal representative holds the property as a trustee and must file a UHT return. Exemptions for the year of death and the following year give the representative time to obtain probate and settle the estate. Working with a skilled Tax Accountant and trusted Tax Services ensures compliance and timely Income Tax Filing.