CRA Unused Housing Tax Appraisal

Canada Unused Housing Tax

In recent months, Canadian lawmakers have implemented a multitude of new regulations intended to address the nation’s housing crisis. One such regulation that came into effect in January 2022, the Canada Underused Housing Tax, is the result of lawmakers’ efforts to incentivize the use of underused residential real estate for the benefit of all Canadians. This tax usually applies to non-resident, non-Canadian owners; however, it can also be applicable in certain cases for Canadians.

Under the new taxation scheme, owners of residential properties identified as ‘underused’ will be subject to a levy that varies in size depending on the classification of their property and the length of time it has remained unoccupied. To assess the tax, a property appraisal is required.

A property appraisal is essentially an in-depth analysis of a particular property and its value compared to that of the marketplace. As such, it is often instrumental in setting property values during real estate transactions, negotiations, and disputes. And it is especially important for taxpayers in assessing their potential liabilities to the Canada Underused Housing Tax.

For taxpayers liable to the Canada Underused Housing Tax, an appraisal helps to determine the true value of their residence to help ensure that the levy accurately reflects the fair market value of their property.

Apart from influencing the potential tax burden, an appraisal may also help determine whether or not the property could be repurposed to help reduce the taxpayer’s liability. In other words, an appraisal can help uncover opportunities to make the property more valuable and release it back into the market.

When commissioning an appraisal, taxpayers must ensure that it has been conducted following the rules and guidelines governing the profession. A professionally conducted appraisal should be conducted by a qualified appraiser with credentials from a credentialing agency like the Canadian National Association of Real Estate Appraisers (CNAREA) a not-for-profit corporation that educates and certifies real property appraisers throughout Canada.

In summary, an appraisal for property subject to the Canada Underused Housing Tax is an essential tool for helping individuals to better understand and manage their potential property tax liabilities.