If you're a US citizen who owns a condo in Vancouver, a cottage in Muskoka, or a vacation property anywhere in Canada, you've probably heard the good news: the federal Underused Housing Tax (UHT) is gone. On March 26, 2026, Budget 2025 Implementation Act, No. 1 received royal assent, and with it, the 1% annual tax on "underused" Canadian housing — along with the return that came with it — was repealed for 2025 and every year after.
That's a real win. The UHT was a compliance headache for thousands of American owners who had never even heard of it until their Canadian accountant (or a very stern CRA letter) told them they owed a filing. But here's the part that's easy to miss in the celebration: the repeal is not retroactive. If you owned a Canadian residential property in 2022, 2023, or 2024, you may still owe returns, tax, penalties, and interest for those years — and the CRA hasn't waived any of it.
This guide walks through what actually changed, what obligations survive the repeal, and how to get your Canadian property bookkeeping in order so this kind of surprise doesn't happen again — whether it's a federal tax or one of the provincial and municipal vacancy taxes that are still very much alive.
What the Underused Housing Tax Actually Was
The UHT took effect for the 2022 calendar year as part of a broader push by the Canadian government to discourage foreign speculation in the housing market. It imposed a 1% annual tax on the value of vacant or underused residential property owned, directly or indirectly, by certain non-resident, non-Canadian owners.
The catch that tripped up so many US owners wasn't the tax itself — it was the filing requirement. The UHT return (Form UHT-2900) was owed by any "affected owner" who wasn't specifically classified as an "excluded owner," even if that owner ultimately qualified for an exemption and owed zero dollars in tax. Excluded owners were generally Canadian citizens and permanent residents who held title directly in their own name. Everyone else — including US citizens who owned property directly, and Canadians who held property through a corporation, trust, or partnership — had to file annually to claim an exemption (such as the vacation-property exemption available for qualifying rural or recreational areas), or pay the tax.
Because the exemptions were generous but the filing obligation was universal, a lot of US owners who never owed a cent of actual tax still owed a return — and missing it triggered a minimum penalty of $1,000 for individuals ($2,000 for corporations), regardless of whether any tax was actually due.
What Changed in March 2026
Budget 2025 eliminated the UHT going forward, effective for the 2025 calendar year onward. Practically, that means:
- No UHT return is required for 2025 or any future year. If your only reason for filing was the UHT, that annual obligation is gone.
- No UHT is payable for 2025 onward, even if you would have owed it under the old rules.
- The 2022, 2023, and 2024 obligations were not forgiven. The requirement to file — and pay, where applicable — for those three years remains in force, including any penalties and interest for returns that were late or never filed.
That last point is the one worth sitting with. If you bought a Canadian property in, say, 2023 and never knew the UHT existed, you may currently have two or three years of unfiled returns sitting on the CRA's books, each carrying its own minimum penalty exposure. The repeal removes the tax's future burden; it does not erase past exposure. If you're not sure whether you filed for those years, that's worth confirming with a cross-border tax preparer before the CRA sends a letter instead.
The Federal Repeal Doesn't Touch Provincial and Municipal Vacancy Taxes
This is the part that catches people off guard the most: killing the federal UHT did nothing to the patchwork of provincial and municipal vacancy taxes that several Canadian jurisdictions layered on top of it. If your property sits in one of these areas, you likely still have active filing and payment obligations completely separate from anything that changed in March 2026.
- British Columbia's Speculation and Vacancy Tax (SVT) — a provincial tax that, for the 2026 tax year, charges foreign owners and owners who report most of their income outside Canada a rate of 3% of assessed value (versus 1% for Canadian citizens and permanent residents). The SVT declaration is due by March 31 each year, and it applies independently of the now-defunct federal UHT.
- Vancouver's Empty Homes Tax (EHT) — a city-level tax on top of the provincial SVT. For the 2025 reference year, the rate on deemed-or-declared-empty properties was 3% of assessed taxable value, with declarations due in early February.
- Toronto's Vacant Home Tax (VHT) — Toronto runs this entirely at the municipal level, with no provincial layer. The 2025 rate was 3% of Current Value Assessment, with the declaration due April 30 and payment split across three installments later in the year.
In other words, a US citizen who owns a condo in downtown Vancouver could be dealing with as many as three separate vacancy-style filings in a given year — provincial, municipal, and (through 2024) federal — each with its own form, deadline, and definition of what counts as "vacant" or "underused." The federal repeal simplifies exactly one of those layers.
What US Owners Should Actually Do Now
- Confirm your 2022–2024 UHT filing status. If you owned qualifying property in any of those years and aren't certain a return was filed, don't assume the repeal covers it — it doesn't. Late filings for those years still carry penalty and interest exposure, and the clock on collections doesn't stop just because the program ended.
- Check whether your property sits inside a provincial or municipal vacancy-tax boundary. Ownership in Vancouver, the rest of British Columbia's designated regions, or Toronto means you likely have an active annual declaration to make regardless of what happened federally.
- Keep occupancy records year-round, not just at filing time. Vacancy taxes and exemptions typically hinge on how many days a property was occupied by a qualifying tenant or owner. Number of nights stayed, lease agreements, and utility usage are the kind of evidence that turns a stressful audit into a five-minute confirmation.
- Don't conflate cross-border tax residency with property vacancy tax. These are different regimes with different rules — being a US tax resident doesn't automatically excuse or trigger any of them, and each jurisdiction defines "foreign owner" on its own terms.
Why This Is a Bookkeeping Problem, Not Just a Tax Problem
The reason UHT and vacancy-tax filings catch people off guard usually isn't that the tax is complicated — it's that the records needed to prove an exemption were never being kept in the first place. Knowing how many days a property was occupied, what expenses were paid toward it, and which entity technically holds title requires the same discipline as any other part of running your finances: consistent, dated, categorized records that you can hand to an accountant (or the CRA) without having to reconstruct a year of memory.
This is exactly the kind of cross-border complexity that benefits from treating your property ownership like any other set of books — a distinct account or ledger for the property, occupancy notes tied to dates, and expense categories that map cleanly to whatever exemption or declaration you'll eventually need to support.
Keep Cross-Border Property Records You Can Actually Defend
Whether it's a federal tax that no longer exists, a provincial speculation tax, or a city vacancy declaration, the common thread is the same: you need clear, dated records of occupancy and ownership to back up whatever you claim. Beancount.io gives you plain-text accounting that's transparent and version-controlled, so a property's occupancy notes, expenses, and filing history live in the same auditable ledger as the rest of your finances — no scrambling to reconstruct three years of history when a jurisdiction asks. Get started for free and see how much easier tax season gets when your records were never in doubt.