Canada Eliminates the Underused Housing Tax
What German Owners of Canadian Property Need to Know:
With the passage of the 2025 federal budget on November 17, 2025, the Canadian government has decided to suspend the Underused Housing Tax (UHT) starting with the 2025 tax year.
The UHT, introduced on January 1, 2022, imposed a 1% annual tax on the value of Canadian residential property that was not occupied as a primary residence or rented out on a long-term basis. The measure primarily affected foreign owners, who were required to file an annual return even when no tax was payable.
Why is the government eliminating the tax?
The UHT proved administratively burdensome, generating significant compliance costs and adding layers of bureaucracy.
The policy objectives—curbing speculative vacancies and increasing the availability of housing for Canadians—will instead be continued at the provincial and municipal levels, where similar tools are already in place.
Examples include:
• British Columbia: Speculation and Vacancy Tax
• City of Vancouver: Empty Homes Tax
• Ontario: Non-Resident Speculation Tax on purchases by foreign buyers
These measures remain in force. The repeal applies only to the federal UHT.
Summary for German owners of Canadian property:
1. The effect of “no payments, no UHT filings” applies beginning with the 2025 tax year.
2. All existing obligations remain in place for the 2022–2024 tax years and UHT returns must still be filed with the Canada Revenue Agency (CRA).
