Navigating the Changing Landscape of Underused Housing Tax in Whistler, Canada

The Canadian real estate market has seen its fair share of transformations, and one area that continues to undergo changes is the underused housing tax (UHT). While the rules surrounding this tax have been challenging to interpret, it's crucial for property owners, especially foreign ones, to stay informed about the latest updates. In this blog post, I'll touch on the recent changes to UHT rules, focusing on its application to foreign owners and the nuances that make compliance a challenging endeavor.

UHT and Foreign Owners:
For those who do not fall under the criteria for an exemption the Under Used Housing Tax comes into play. The tax, set at 1% of the assessed \value, is an annual obligation that foreign owners need to be mindful of. Although individuals named on the property's title may qualify for exemptions, properties held by corporations or family trusts outside of Canada are subject to the 1% UHT regardless of their personal usage.

Usage Requirements:
There are exemptions available for properties where each of the owners listed on the title utilize the residence for at least 28 days each year. However, the situation becomes more complex when dealing with entities such as corporations or family trusts. Rental use of the property does not count towards the required 28 days of personal usage, making it a potential stumbling block for foreign owners looking to escape the UHT burden.

Individual Ownership Challenges:
For properties owned by individuals, each person named on the title must individually fulfill the 28-day usage requirement. This could present a considerable challenge for foreign owners who may find it logistically challenging to meet this criterion, especially if they have invested in Canadian real estate for pure investment purposes.

Industry-Specific Considerations:
Being a resort town with exemptions from Canada's two-year Foreign Buyer Ban,  organizations such as Tourism Whistler are actively pursuing an exemption for the UHT. Given the underlying complexities of the new tax and various regional zoning regulations in Whistler that limit owner usage to 56 days per year for revenue-generating properties like hotels, it appears contradictory that such properties are categorized under the UHT "residential property" definition. This is particularly challenging for multiple owners of the same hotel unit to meet their 28-day annual stay requirement under the current rules, as these types of properties are not conducive to long-term or frequent stays by owners to meet the current criteria.

Deadline Alert:
Affected property owners must be aware that the deadline for filing and paying UHT has been pushed to April 30th, 2024. This leaves a limited timeframe for those impacted to understand the evolving rules, assess their property usage, and make informed decisions to mitigate UHT penalties.

Although the underused housing tax in Canada can feel particularly concerning for foreign ownership, it is a dynamic issue.  And while it appears the majority of vacation property owners will be required to file, many may qualify for exemptions. To find out how your property is impacted, consult with your accountant well before the deadline to strategize on how to best navigate the UHT landscape effectively, and to potentially avoid penalties. 

Check out this link to the latest information on the Under Used Housing Tax: CLICK HERE

Need a referral to a local Whistler Accountant that is familiar with the UHT rules? Send me an email, and I'd be happy to connect you!