Underused Housing Tax and Bare Trusts in Canada: What to Know

If a home or cottage is held through a bare trust, you may wonder whether the Underused Housing Tax (UHT) was ever your problem. The answer turns on who is treated as the owner, and for this tax that is often not the person who actually uses or benefits from the property.

This article explains how CRA described bare trusts for UHT, who was expected to file, and what owners should know about past years. Whether a particular arrangement is a bare trust is a question of fact, so your own situation is worth confirming with a lawyer or accountant.

This article covers Canadian federal tax law, which applies in every province.

How the UHT looked at bare trusts

CRA describes a bare trust, for UHT purposes, as one where the trustee holds legal (titled) ownership of the trust property. The beneficiary is the person behind the arrangement who benefits from the property, but the trustee is the one whose name is on title.

Under the UHT Act, an owner is a person who could reasonably be considered an owner based on a land registration system, so a beneficiary is not an owner under that test. That is why the trustee, not the beneficiary, was the focus.

Who was expected to file

For UHT, a trust is not a person. The trustee who owns the residential property is the owner and files Form UHT-2900 for the year if they are an affected owner.

CRA interprets "trust" to include a bare trust for the excluded-owner rules, so a corporation that owns as trustee of a bare trust has to file. A corporation acting as bare trustee could not simply rely on being a corporation to avoid filing.

Which years still matter

Affected owners do not need to file a UHT return or pay the tax for 2025 and subsequent calendar years. Filing and payment still apply to the 2022, 2023 and 2024 calendar years.

So if a bare trust held residential property in those earlier years, a return may still have been required of the trustee. If you are not sure whether one was filed, that is worth checking now rather than waiting for CRA to raise it.

UHT is separate from income tax bare trust rules

Do not confuse UHT with the T3 reporting rules for bare trusts. CRA says bare trusts are not subject to the trust reporting rules, and so need not file a T3 or Schedule 15, for taxation years ending on or after December 31, 2024 and before December 31, 2026. That relief says nothing about UHT filings for earlier years.

Reportable bare trusts are subject to the trust reporting rules for taxation years ending on or after December 31, 2026. Those are income tax rules, with their own exceptions, and they do not revive the UHT for 2025 or later.

What to do next

• Confirm who is registered on title to the residential property.
• List the years from 2022 to 2024 in which the property was held in the arrangement.
• Check whether the trustee filed Form UHT-2900 for those years where it was required.
• Gather the trust or agency documents showing who the trustee acts for.
• Ask a lawyer or accountant whether the arrangement is a bare trust and whether any past filing is outstanding.

If a past return was missed, a lawyer or accountant can explain your options before you contact CRA.

Frequently asked questions