Underused Housing Tax- Need explaining

[El Carnicero]

Anybody seen or dealt with this new Underused Housing Tax that the liberals have instituted?

Trying to figure out if it applies to those who owning a primary residence and a residential rental property, or if we fit into the "exempted" category.

Any other landlords or tax accountants that can weigh in on this?

[Stinky Buffalo]

Thanks for the clarification, MoFugger.

[MoFugger21]

I haven't spent a lot of time (yet) reading up on it (on my to do list...), but... Excluded owners of a residential property in Canada (no filing obligations) are:
- individuals who are Canadian citizens or permanent residents
- a person who owns a residential property as a trustee of a mutual fund trust, real estate trust
- Canadian corporation with shares listed on Canadian stock exchange
- registered charities
- housing cooperative
- Indigenous governing body or corporation wholly owned by Indigenous governing body

So, you must file if:
- foreign person/individual
- Canadian corporation
- Canadian citizens/permanent residents who own property as a trustee (if your name is on title but you are not the beneficial owner - see co-signed for a child's home, or name on title of elderly parent's home for estate purposes)
- individual who owns residential property as a partner of a partnership (and yes, as of right now, most accounting firms are taking the conservative approach and splitting residential rental income with your spouse could be considered a 'partnership' so you should file to be safe)

So....
- if you wholly own a residential rental property as an individual (Canadian citizen/permanent resident) - no filing obligation
- if you own a residential rental property with another person - you need to (SHOULD) file... take the safe route and file to avoid the (potential) $5,000 penalty
- if your name is on title of a 2nd property and you are not the beneficial owner - you need to file
- if your corporation owns a residential rental property - you need to file

Then there are exemptions for the actual tax... (facepalm). Essentially, if you are a Canadian citizen, or own a Canadian corporation, you will be exempt for the tax, but you still may have a filing obligation.

The potential penalties are ridiculous, so if in doubt, file the form... I don't imagine you will be penalized for filing when you weren't supposed to.

Failure to file for individual - min of $5,000
Failure to file for corporation - min of $10,000

More detailed info can be found here: https://www.canada.ca/en/services/ta...ing-tax.html#2

[CBintheNorth]

Mofugger has it all layed out very well.

In your case all you need to know is that if you AND your spouse (or anyone else for that matter) are on the title of the rental, then you'd best be filing.
You won't have to pay tax if you're both residents, but you both must file.

[El Carnicero]

Originally Posted by MoFugger21

I haven't spent a lot of time (yet) reading up on it (on my to do list...), but... Excluded owners of a residential property in Canada (no filing obligations) are:
- individuals who are Canadian citizens or permanent residents
- a person who owns a residential property as a trustee of a mutual fund trust, real estate trust
- Canadian corporation with shares listed on Canadian stock exchange
- registered charities
- housing cooperative
- Indigenous governing body or corporation wholly owned by Indigenous governing body

So, you must file if:
- foreign person/individual
- Canadian corporation
- Canadian citizens/permanent residents who own property as a trustee (if your name is on title but you are not the beneficial owner - see co-signed for a child's home, or name on title of elderly parent's home for estate purposes)
- individual who owns residential property as a partner of a partnership (and yes, as of right now, most accounting firms are taking the conservative approach and splitting residential rental income with your spouse could be considered a 'partnership' so you should file to be safe)

So....
- if you wholly own a residential rental property as an individual (Canadian citizen/permanent resident) - no filing obligation
- if you own a residential rental property with another person - you need to (SHOULD) file... take the safe route and file to avoid the (potential) $5,000 penalty
- if your name is on title of a 2nd property and you are not the beneficial owner - you need to file
- if your corporation owns a residential rental property - you need to file

Then there are exemptions for the actual tax... (facepalm). Essentially, if you are a Canadian citizen, or own a Canadian corporation, you will be exempt for the tax, but you still may have a filing obligation.

The potential penalties are ridiculous, so if in doubt, file the form... I don't imagine you will be penalized for filing when you weren't supposed to.

Failure to file for individual - min of $5,000
Failure to file for corporation - min of $10,000

More detailed info can be found here: https://www.canada.ca/en/services/ta...ing-tax.html#2

Good Lordy, that is still confusing. Typical.

-Okay, So, I'm a Canadian citizen.

-The rental is owned under my and my spouses name personally. She is a stay at home mom with no income- Not sure how that affects splitting the taxable rental income- If that is even optionable- Does we still fall under a "partnership"?

[El Carnicero]

Originally Posted by CBintheNorth

Mofugger has it all layed out very well.

In your case all you need to know is that if you AND your spouse (or anyone else for that matter) are on the title of the rental, then you'd best be filing.
You won't have to pay tax if you're both residents, but you both must file.

So, Being that both Wifey and I are on the title, we both need to file it. But due to the fact we are Citizens born and raised, we will fit into the exempted section.

Do we just file based on the one rental unit owned, or do we have to file notice on our joint ownership of our primary residence as well?

[CBintheNorth]

Originally Posted by El Carnicero

So, Being that both Wifey and I are on the title, we both need to file it. But due to the fact we are Citizens born and raised, we will fit into the exempted section.

Do we just file based on the one rental unit owned, or do we have to file notice on our joint ownership of our primary residence as well?

Only on the rental.

[El Carnicero]

Originally Posted by CBintheNorth

Only on the rental.

okay.
That gives me a single sigh of relief so far.

[The Cook]

Clear as mud.
Just sent an email to my accountant as the wife and I are on a property title because we cosigned a mortgage for our daughter and son in law, and we share title on our house, which we live in. The kids live in their house.

Yup, clear as mud.

[El Carnicero]

Originally Posted by The Cook

Clear as mud.
Just sent an email to my accountant as the wife and I are on a property title because we cosigned a mortgage for our daughter and son in law, and we share title on our house, which we live in. The kids live in their house.

Yup, clear as mud.

My wife's brother co-signed a mortgage with his younger brother years ago. This will likely affect them as well.

[CBintheNorth]

Originally Posted by The Cook

Clear as mud.
Just sent an email to my accountant as the wife and I are on a property title because we cosigned a mortgage for our daughter and son in law, and we share title on our house, which we live in. The kids live in their house.

Yup, clear as mud.

All four of you should file on their property. Yours is fine.

Basically if someone is on title that does not live in that home, all names listed on title should file. Even if it is not a rental.

Also should file on any properties that you own, but are not your primary residence. Even if only you are on title.
This is due to the clauses pertaining to "recreational and cottage" dwellings.

For you and your wife, if you both live in your home and are both on title, there is no requirement to file.


I'm sure once they get absolutely inundated with forms that really have nothing they can go after they will either:

a) Figure out a way to go after everyone somehow, to collect any revenue they feel they can collect.

b) Slim down the requirements to file so they don't have to go through 24 million forms that aren't taxable.

[MoFugger21]

And FYI... A form needs to be filed for EACH property you own that falls into those categories. You can't file one form for multiple properties.... (facepalm again).

If I'm being honest, this feels like an information finding mission by the government. If Canadian individuals and corporations aren't actually subject to the tax, why does the government NEED the information contained in the form.....?

Getting the information could lead the government to inquire about, for example, whether a corporation is a) charging/receiving fair market value rent on the rental property, or b) a taxable benefit is being included in an employee's, shareholder's, etc income.

The administrative burden this is going cause, for individuals, their accountants, and the CRA, is ridiculous.

I'll be interested to see if anything with this changes when the budget is released March 28.

[CBintheNorth]

Originally Posted by mofugger21

and fyi... A form needs to be filed for each property you own that falls into those categories. You can't file one form for multiple properties.... (facepalm again).

if i'm being honest, this feels like an information finding mission by the government. if canadian individuals and corporations aren't actually subject to the tax, why does the government need the information contained in the form.....?

Getting the information could lead the government to inquire about, for example, whether a corporation is a) charging/receiving fair market value rent on the rental property, or b) a taxable benefit is being included in an employee's, shareholder's, etc income.

The administrative burden this is going cause, for individuals, their accountants, and the cra, is ridiculous.

I'll be interested to see if anything with this changes when the budget is released march 28.

Bingo!!!

[CBintheNorth]

For those that feel that this is an invasion of privacy (it really is) and aren't going to file because there's no way that they're going to check.....I heard that the Feds are already on Land Titles about updating information faster.
So there's that.

[El Carnicero]

Originally Posted by MoFugger21

If I'm being honest, this feels like an information finding mission by the government. If Canadian individuals and corporations aren't actually subject to the tax, why does the government NEED the information contained in the form.....?

.

That is exactly how I feel about this whole thing.
Feels like a witch hunt.

[El Carnicero]

So additional question.

Wife is doing our taxes using tax software (wealthsimple), and it does not show or have the form (UHT 2900) to fill out.

Do we have to submit this form separately?

[CBintheNorth]

Originally Posted by El Carnicero

So additional question.

Wife is doing our taxes using tax software (wealthsimple), and it does not show or have the form (UHT 2900) to fill out.

Do we have to submit this form separately?

Yes.
It is not part of your return, which is where it's going to get sticky. Many won't hear about it if their accountants don't voluntarily inform them.

[MoFugger21]

Originally Posted by CBintheNorth

Yes.
It is not part of your return, which is where it's going to get sticky. Many won't hear about it if their accountants don't voluntarily inform them.

Ya... This.

I fully intend to mail all of the forms that we end up filling out. Make it as big of a pain in the ass for CRA as possible and maybe CRA will complain to Finance... Uggg. This is so stupid.

[El Carnicero]

PHP Code:

[QUOTE][/QUOTE] 


Spoke with an accountant and they have informed us that if our rental home is in our name, and we are Citizens, we are not required to even file the paperwork.
That is also mirrored on the form UHT-2900 description.

When speaking with the accountant she told us what a nightmare this has created for herself and her firm and the reams of paperwork being created. She was disgusted with the utter confusion being created by the poor legal language surrounding this particular tax.

Do I fully trust that we don’t have to file????? Not one bit. I still worry that the govt will find a way to screw us over even being exempted.

[MoFugger21]

Originally Posted by El Carnicero

Spoke with an accountant and they have informed us that if our rental home is in our name, and we are Citizens, we are not required to even file the paperwork.
That is also mirrored on the form UHT-2900 description.

When speaking with the accountant she told us what a nightmare this has created for herself and her firm and the reams of paperwork being created. She was disgusted with the utter confusion being created by the poor legal language surrounding this particular tax.

Do I fully trust that we don’t have to file????? Not one bit. I still worry that the govt will find a way to screw us over even being exempted.

If you are considered a partner of a partnership (which is 100% plausible with spouses jointly owning another property), you are both required to file form UHT-2900, regardless of being Canadian citizens and/or permanent residents.

If you, your spouse and your accountant are taking the stance that you and your spouse are not in a partnership with regards to the residential property in question... I would be sure to look up the legal definition of partnership in CRA's eyes and ensure you're comfortable taking that stance and not filing because of it.

My recommendation for clients who jointly own properties will be to file. I'd rather take the conservative approach and file when maybe it wasn't required, as opposed to rolling the dice on the $5000 penalty being applied.

[El Carnicero]

It seems literally every person, accountant, and even the CRA have a different perspective as to what is actually defined. I've read multiple papers written on the subject, all giving differing explanations, I've spoken to multiple accountants who all have equally differing expert opinions. Including even the CRA ppl that I have spoken to.

I feel like regardless of how one files, or doesn't file or is or isn't exempted, the f#4ching govt is going to bend everyone over the barrel regardless of their "housing" situation, and now I'm both ****ed and stressed.

[Sundog57]

Easy Peasy - If you a resident/former resident of Hong Kong or the PRC and you own investment real estate in Vancouver or Toronto - you have to pay.

They could have written it that way and made their intent much clearer... but of course the woke would never base a tax on someone's race or nationality.

[MoFugger21]

Originally Posted by El Carnicero

It seems literally every person, accountant, and even the CRA have a different perspective as to what is actually defined. I've read multiple papers written on the subject, all giving differing explanations, I've spoken to multiple accountants who all have equally differing expert opinions. Including even the CRA ppl that I have spoken to.

I feel like regardless of how one files, or doesn't file or is or isn't exempted, the f#4ching govt is going to bend everyone over the barrel regardless of their "housing" situation, and now I'm both ****ed and stressed.

To be fair... Just about any accounting questions posed to 5 different accountants will provide 3-4 differing answers/opinions, lol.

If I were you, or my client, I would file the forms - 1 for yourself and 1 for your wife.

[El Carnicero]

Originally Posted by MoFugger21

To be fair... Just about any accounting questions posed to 5 different accountants will provide 3-4 differing answers/opinions, lol.

If I were you, or my client, I would file the forms - 1 for yourself and 1 for your wife.

True enough.