Tax updates for property owners in Canada in October 2023
Underused Housing Tax (UHT)
The UHT is a new tax that applies to residential properties in Canada that are considered to be underused. The tax is intended to discourage foreign investors from buying up properties and leaving them vacant. The UHT is calculated at a rate of 1% of the fair market value of the property, and it is payable by the owner of the property.
Deadline for filing UHT returns
The deadline for filing UHT returns for the 2022 calendar year was originally October 31, 2023. However, the Canada Revenue Agency (CRA) has announced that it will extend the deadline to April 30, 2024, for affected owners who file their returns and pay any outstanding UHT by that date. The CRA will also waive penalties and interest for late filings for the 2022 calendar year.
Home Buyer’s Tax Credit
The Home Buyer’s Tax Credit (HBTC) is a credit that provides financial assistance to first-time home buyers in Canada. The credit is equal to 15% of the purchase price of a qualifying home, up to a maximum of $9,000.
First-Time Home Buyers’ Credit
The First-Time Home Buyer’s Credit (FTHBC) is a credit that provides financial assistance to first-time home buyers in Canada who have a household income of less than $120,000. The credit is equal to 5% of the purchase price of a qualifying home, up to a maximum of $5,000.
Tax implications of selling a property
When you sell a property in Canada, you may be subject to capital gains tax. Capital gains tax is calculated on the difference between the fair market value of the property when you sell it and the adjusted cost base (ACB) of the property. The ACB is the cost of the property plus any capital expenditures that you have made on the property.
Property tax
Property tax is a tax that is levied on the value of real estate property. The amount of property tax that you pay is based on the assessed value of your property and the property tax rate in your municipality.
