Table of Contents
Introduction
If you are reading this article, you may have an underused property. It may be an empty unit in a multi-unit building, or you’re renting out your home while you’re on vacation. While using your housing for these purposes may seem like a good idea at first, there is one catch you may be subject to an Underused Housing Tax (UHT).
What is the Underused Housing Tax?
The underused housing tax is a tax on underused property. The property owner pays this tax, not the person renting it out.
This means that if you’re renting out a room in your home, for example, and then decide to move into that room yourself because it’s too tiny or noisy for guests (and therefore no longer qualifies as an “underutilized” space). You won’t have to pay any extra money because your rental use has ended.
However! If you want to keep renting out this room even though it’s become more suitable for living in yourself–for example, because it’s cheaper than paying rent somewhere else–then yes. You will have to pay this tax on top of whatever rent increase would be required before moving into such an apartment yourself, otherwise known as “the cost of doing business.”
The upshot: If you want to rent a room in your home, watch for any tax changes that may affect you. And if you currently don’t rent out your house or apartment, it might be a good idea to start doing so. Well…you’ve been warned!
How do I pay for it?
To pay the underused housing tax, you can do so in one of three ways:
- Through your property tax bill. If you own a home classified as underused and live in an area where municipal taxes are paid through the property tax system, this will likely be how you receive your bill. You’ll need to pay it by December 31st each year as part of your regular property tax payment schedule (e.g., quarterly or annually).
- Through your utility bill. Live in an apartment building with more than four units and receive all utilities through one account. This could be how you receive information about paying underused housing taxes–it depends on what kind of utility provider they use! Again, this is all new information. In that case, we recommend checking with them directly before assuming anything else. Companies have different policies regarding how they charge these taxes depending on who owns each unit within their building(s).
Through your rent. If you live in a privately owned apartment complex, this is one option for paying underused housing taxes–but you and your landlord must agree to this method. It’s also worth noting that this will be billed directly to the landlord rather than going through you first, so again, make sure they’re okay with it before assuming anything else!
How much will I have to pay?
The amount you pay depends on the number of bedrooms on your property. You will pay $200 per month if you have a three-bedroom property. If you have a four-bedroom property and rent out all four bedrooms, your monthly tax bill will be $300.
If this sounds like too much for your budget or if it’s just not worth it for what little rent money comes in from short-term rentals (or both), there may be other ways to go about making money off of your home without having to worry about paying extra taxes every year!
One option is to simply rent out your home as a traditional rental property. Renting out rooms in your home can be a great way to make money, especially if you live in an expensive city like San Francisco or New York, where housing prices are sky-high! If you’re looking for ideas on how to go about this, check out this article that explains the different types of short-term rentals and how they work.
Where is this tax applicable?
To understand the UHT, you first have to know what it is. The UHT tax applies only in Canada and not all provinces. It’s essential for consumers who live in areas where it does use because it can significantly impact your finances if you need to be more careful about how much money goes into this account each year.
In addition, there are some rules surrounding this type of savings account:
- It must be opened with a financial institution (bank or credit union) approved by Revenue Canada as an authorized financial institution (AFI).
- You must deposit at least $1 per month into your account until its balance reaches $5000; at which point no further contributions are required unless they fall below $2500 during any given year, which would trigger another requirement for depositing more funds into UHTs until they meet their minimum threshold again.*
The Underused Housing Tax is a tax you may pay if your property is underused.
The Underused Housing Tax is a municipal tax you may pay if your property is underused. The tax is not federal or provincial but rather a fee levied by your local municipality and collected by them on behalf of the province.
The Underused Housing Tax (UHT) applies to residential properties either vacant for more than four months in a calendar year or used as short-term rentals (less than 30 days) for more than 180 days in a calendar year. In both cases, it’s up to individual municipalities to decide whether they want their residents to pay this fee and how much they should charge them.
The UHT can be waived if you are a Canadian citizen or permanent resident and occupy the property as your principal residence. If you live on the property with your spouse and dependents, they will also be considered occupants if they don’t own another home.
Conclusion
The Underused Housing Tax is a tax you may pay if your property is underused. If it’s not being used as a home, it could be considered an investment or rental property. This means the tax applies when those properties are not used as they should be under the law.
