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🇨🇦 UHT Repeal 2025+ • Historical Vacation Exemption • 28-Day Rule

UHT Vacation Property Exemption Guide 2026

Important 2026 update: the Underused Housing Tax no longer applies to the 2025 and subsequent calendar years. This guide explains the current repeal and the historical vacation-property exemption that applied to 2022–2024 UHT returns.

1. Major 2026 update: UHT was eliminated for 2025 and later years

The Underused Housing Tax no longer applies to the 2025 and subsequent calendar years. On March 26, 2026, the Budget 2025 Implementation Act, No. 1 received Royal Assent. CRA's current UHT guidance states that affected owners do not need to file a UHT return or pay UHT for 2025 and subsequent calendar years. UHT filing and payment obligations remain for the 2022, 2023 and 2024 calendar years.

Key Framework Highlights:
  • No 2025 UHT return is required under the current law.
  • No 2026 UHT return is required under the current law.
  • No UHT is payable for 2025 or 2026.
  • Historical UHT obligations for 2022, 2023 and 2024 remain relevant where a return was required and has not been filed or corrected.
  • The vacation-property exemption is therefore primarily a historical rule for resolving 2022–2024 UHT obligations.
Action Checklist:
  • If dealing with 2025 or 2026, do not prepare a new UHT return solely because you own a vacation property.
  • If dealing with 2022–2024, determine whether you were an affected owner for the relevant year.
  • For 2022–2024, determine whether the vacation-property exemption or another exemption applied.
  • If an older UHT return was missed, determine the historical filing obligation and applicable penalty before taking corrective action.

2. Historical vacation-property exemption for 2022–2024

For the UHT years that remain relevant, an affected individual owner could qualify for the vacation-property exemption if the residential property was located in an eligible area of Canada and the owner or their spouse or common-law partner personally used the property as a place of residence or lodging for at least 28 days in the calendar year. Beginning with the 2024 calendar year, additional conditions were added concerning the owner's annual return and the use of the vacation-property exemption for other residential properties.

Historical requirementRule
Owner typeOnly an individual who owns the residential property in their own right qualifies for the vacation-property exemption.
LocationProperty must be in an eligible area of Canada under the statutory census-area and population-centre rules.
Personal useOwner or spouse/common-law partner must personally use the property as a place of residence or lodging for at least 28 days in the calendar year.
2024+ additional declarationOwner must indicate in the annual UHT return that no UHT is payable because of the vacation-property exemption.
2024+ one-property restrictionNeither the owner nor spouse/common-law partner could claim the vacation-property exemption for another residential property for the same calendar year.

3. Historical geographic eligibility was more complex than 'outside a CMA or CA'

For the 2024 and subsequent UHT years in which the exemption was available, an eligible area of Canada was not defined simply as a place outside every CMA or CA. CRA's current notice describes several qualifying geographic situations: a property outside both a census metropolitan area and census agglomeration; a property inside a census agglomeration that is not a specified census agglomeration; or a property inside a census metropolitan area or specified census agglomeration but outside a population centre that forms part of that area or agglomeration.

Key Framework Highlights:
  • A property can qualify in some areas that are technically within a CMA or specified CA if it is outside the relevant population centre under the statutory test.
  • A generic statement that every CMA or 30,000+ CA automatically disqualifies the property is therefore inaccurate.
  • The CRA vacation-property designation tool should be used for the specific property address or postal information when resolving historical eligibility.
  • In rare cases where the tool cannot determine the result, CRA provides a manual place-search process.
Statistical conceptCRA definition relevant to historical UHT exemption
Census metropolitan area (CMA)Statistical area with a total population of at least 100,000, of which 50,000 or more live in the core population centre.
Census agglomeration (CA)Statistical area with at least 10,000 residents living in the core population centre.
Specified census agglomerationA census agglomeration having a population of at least 30,000 for the vacation-property exemption rules.
Population centreArea with at least 1,000 residents and a population density of at least 400 persons per square kilometre.

4. The 28-day historical occupancy test

For the vacation-property exemption, the owner or their spouse or common-law partner had to personally use the residential property as a place of residence or lodging for at least 28 days in the relevant calendar year. CRA's own examples show that a property used for 21 days in 2023 did not meet the exemption, while 31 days in July and 31 days in August in 2024 satisfied the 28-day requirement.

Key Framework Highlights:
  • The use must be personal use by the owner or spouse/common-law partner as a place of residence or lodging.
  • The 28 days are measured within the calendar year.
  • The 28-day test alone was not enough; geographic eligibility and owner/status conditions also had to be satisfied.
  • For 2024, the additional annual-return and one-vacation-property conditions also applied.
Personal use during relevant yearHistorical exemption result
21 days28-day condition not satisfied.
28 daysMeets the numerical occupancy condition, subject to all other exemption requirements.
31 daysMeets the numerical occupancy condition, subject to all other exemption requirements.
60+ daysMeets the numerical occupancy condition, subject to all other exemption requirements.

5. Who could claim the historical vacation-property exemption?

The historical vacation-property exemption was narrower than the ordinary concept of owning a cottage. CRA states that only individuals who owned the residential property in their own right could qualify. An individual holding property in their capacity as a partner of a partnership or trustee of a trust did not qualify for this particular exemption.

Ownership situationHistorical vacation exemption
Individual owns the residential property personallyCould qualify if all vacation-property exemption conditions were satisfied.
Individual owns property as a partnership partnerNot eligible for this particular vacation-property exemption.
Individual holds property as trustee of a trustNot eligible for this particular vacation-property exemption.
Corporation owns propertyNot eligible for this individual vacation-property exemption.

6. 2024 additional conditions

Starting with the 2024 calendar year, CRA's historical vacation-property exemption included additional conditions. The affected owner had to indicate in the annual UHT return that no UHT was payable because of the vacation-property exemption. In addition, neither the owner nor their spouse or common-law partner could indicate in another UHT return that the vacation-property exemption applied to another residential property for the same calendar year.

Action Checklist:
  • Confirm the property met the historical geographic eligibility test.
  • Confirm the owner or spouse/common-law partner personally used it for at least 28 days.
  • Complete the annual UHT return for the property for 2024.
  • Indicate that no UHT is payable because the vacation-property exemption applies.
  • Check whether the owner or spouse/common-law partner claimed the vacation-property exemption for another residential property in 2024.

7. Historical UHT filing and penalty rules

For the 2022–2024 calendar years, an affected owner generally had to file Form UHT-2900 by April 30 of the following year even where an exemption meant no UHT was payable. The minimum failure-to-file penalty was $1,000 for an individual and $2,000 for a corporation. Special penalty calculations can produce higher amounts where a return remained outstanding beyond December 31 of the following calendar year.

Key Framework Highlights:
  • An exemption from UHT did not eliminate the historical filing requirement for an affected owner.
  • The ordinary minimum penalty was $1,000 for an individual and $2,000 for a corporation.
  • The penalty can be higher in the special circumstances described in CRA's UHT failure-to-file rules.
  • The 2025+ repeal does not erase an already-existing 2022–2024 filing obligation.
UHT calendar yearHistorical normal filing deadlineStatus in 2026
2022April 30, 2023Historical filing/payment obligation may still need correction if outstanding.
2023April 30, 2024Historical filing/payment obligation may still need correction if outstanding.
2024April 30, 2025Historical filing/payment obligation may still need correction if outstanding.
2025No UHT filing required under current lawUHT eliminated for 2025 onward.
2026No UHT filing required under current lawUHT eliminated for 2025 onward.

8. CRA vacation-property designation tool

For historical UHT years where the vacation-property exemption matters, CRA provides an online vacation-property designation tool to determine whether a property is in an eligible area. CRA recommends performing the verification for each relevant year. If the tool cannot determine the result in a rare situation, CRA provides instructions for a manual place search.

Action Checklist:
  • Enter the property's relevant postal or location information into CRA's vacation-property designation tool.
  • Record the result for the applicable UHT calendar year.
  • If the tool cannot determine the result, use CRA's manual place-search instructions.
  • Retain the supporting location information with the historical UHT records.
  • Do not use a generic assumption that an entire cottage region qualifies or fails; the specific property's location controls.

9. Historical evidence and recordkeeping

Owners resolving 2022–2024 UHT filings should retain records supporting both eligibility and the basis for the exemption. CRA's rules are not a statement that a specific receipt type is universally mandatory, but contemporaneous records are valuable if the claim is later reviewed.

RecordWhy it can help
Calendar of personal staysSupports the 28-day use requirement.
Travel or accommodation recordsCan corroborate dates of personal use.
Utility recordsCan support occupancy patterns but do not independently prove the legal test.
Property title and ownership documentsSupports the individual-owner requirement.
CRA location-designation resultSupports historical geographic eligibility.
Completed UHT-2900 and exemption informationShows the position taken for the historical year.

10. Vacation property versus other UHT exemptions

The historical vacation-property exemption was only one of several UHT exemptions. Depending on the year and facts, other exemptions included primary-place-of-residence use, qualifying occupancy, property not suitable for year-round use, seasonal inaccessibility, uninhabitable property, newly constructed property, new-owner circumstances, deceased-owner circumstances and certain employee-accommodation situations.

Historical exemption categoryGeneral concept
Vacation propertyEligible area + qualifying 28-day personal use + other statutory conditions.
Primary place of residenceResidential property used as a qualifying primary residence.
Qualifying occupancySpecified qualifying occupants and occupancy periods.
Not suitable for year-round use / seasonally inaccessibleProperty meets statutory availability conditions.
UninhabitableProperty unusable for the required period because of qualifying circumstances.
New ownerCertain ownership acquired during the calendar year can create an exemption.
Deceased ownerSpecial exemption rules can apply to a deceased individual and specified representatives/co-owners.

11. Historical 2022–2024 examples

ScenarioHistorical result
Individual owner, eligible area, personally uses property for 35 days in 2024Can qualify for the vacation exemption if all other 2024 conditions, including the annual return declaration and one-property restriction, are satisfied.
Individual owner, eligible area, uses property for only 21 days in 2023Does not meet the 28-day vacation-property condition for 2023 and would need another applicable exemption to avoid UHT.
Individual personally owns a cottage in an eligible area but has a spouse claiming the vacation-property exemption for another property in the same 2024 yearThe 2024 one-vacation-property condition can prevent the exemption for the second property.
Corporation owns a cottage in an eligible areaThe individual vacation-property exemption does not apply to the corporate owner.
Individual owns personally and uses an eligible cottage for 30 days in 2022The historical 28-day requirement is satisfied, subject to the other 2022 exemption conditions and the applicable annual return.
Individual owns an eligible-area cottage in 2026No UHT return or UHT payment is required for 2026 because UHT was eliminated for 2025 and subsequent years.

12. 2026 decision framework

Action Checklist:
  • Step 1 — Identify the calendar year involved.
  • Step 2 — If the year is 2025 or later, stop: CRA states that UHT does not apply and no UHT return or payment is required.
  • Step 3 — If the year is 2022–2024, determine whether the owner was an affected owner on December 31.
  • Step 4 — Determine whether the vacation-property exemption or another historical exemption applied.
  • Step 5 — For vacation exemption claims, verify individual ownership, eligible geographic area and at least 28 days of personal use by the owner or spouse/common-law partner.
  • Step 6 — For 2024, verify the annual-return declaration and the one-vacation-property restriction.
  • Step 7 — If the historical return was required but not filed, calculate the applicable penalty and address the overdue return.
  • Step 8 — Retain ownership, occupancy and location evidence supporting the historical claim.
  • Step 9 — Do not create a new 2025 or 2026 UHT filing merely because the property remains a vacation property.

Frequently Asked Questions

No. CRA states that affected owners do not need to file a UHT return or pay UHT for the 2025 and subsequent calendar years after the UHT changes received Royal Assent on March 26, 2026.

The historical UHT obligations remain relevant for the 2022, 2023 and 2024 calendar years. If an affected owner did not file a required return for one of those years, the historical filing and penalty rules can still matter.

For the historical UHT vacation-property exemption, the owner or their spouse/common-law partner had to personally use the residential property as a place of residence or lodging for at least 28 days in the relevant calendar year, together with the applicable geographic, ownership and other statutory conditions.

No. CRA states that this particular vacation-property exemption was available only to individuals who owned the residential property in their own right, not to individuals acting as partnership partners or trustees.

The test was more detailed than simply asking whether the property was outside a CMA. For the 2024 and later UHT years, CRA's eligible-area rules considered CMAs, CAs, specified CAs and population centres. CRA's vacation-property designation tool should be used for the specific property.

For the historical UHT years, the minimum failure-to-file penalty was $1,000 for an individual and $2,000 for a corporation. Higher penalty calculations can apply in certain circumstances, especially where the return remained outstanding beyond December 31 of the following calendar year.

Official Government & CRA References

2026 UHT Status Metrics

  • UHT for 2025 onward
    No UHT return or tax for 2025 and subsequent years
  • Last UHT year requiring returns
    2024 calendar year
  • Historical vacation-use test
    At least 28 days in 2022–2024 when the exemption applied
  • Historical return
    Form UHT-2900 for affected owners

Related Tax Tools

Underused Housing Tax Master Guide→Underused Housing Tax Exemptions Guide→Non-Resident Speculation Tax NRST Guide→

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