Underused Housing Tax Notice UHTN11 Exemptions for Deceased Individuals and Their Personal Representatives or Co-owners February 2023

S. 6(7)(h) applies rather than s. 6(7)(i) while registered title is held in the name of deceased rather than executor

Example 1

• Although the estate arising on the death of A (not a citizen or permanent resident) on December 15, 2022 included a Canadian detached home, the estate still was not settled on December 31, 2023, and A continues to be the only registered owner.
• A (through A’s executor) was obligated to file returns for the 2022 and 2023 years, but was exempted under s. 6(7)(h) because A died in the current year (re the 2022 return) or the prior year (re the 2023 return).

Example 2

• The estate arising on the death of C on December 15, 2022 included a Canadian detached home, the registered title to which was transferred to the executor (D, also not a citizen or permanent resident) in February 2023. C (through D) was exempted for 2022 under s. 6(7)(h) because C died in that year.
• D must file a return for the property for the 2023 calendar year, but is exempted from the tax under s. 6(7)(i) because D is the personal representative of a deceased individual who was the property’s owner during the prior year (2022), and D is only an owner thereof in 2023 as C’s personal representative.

S. 6(7)(i) exemption is engaged once registered title is transferred from the name of deceased to that of the executor

Example 2

• The estate arising on the death of C on December 15, 2022 included a Canadian detached home, the registered title to which was transferred to the executor (D, also not a citizen or permanent resident) in February 2023. C (through D) was exempted for 2022 under s. 6(7)(h) because C died in that year.
• D must file a return for the property for the 2023 calendar year, but is exempted from the tax under s. 6(7)(i) because D is the personal representative of a deceased individual who was the property’s owner during the prior year (2022), and D is only an owner thereof in 2023 as C’s personal representative.

Application of s. 6(7)(j) exemption to surviving co-owner

Example 3

• E and F (each not a citizen or permanent resident) are spouses and (apparently) joint tenants.
• Since the registered title does not indicate their percentage ownership, they are deemed to each have an “ownership percentage” of 50% under the term’s definition.
• Ownership of E’s interest passes on E’s death in 2022 to F.
• Registered title remains in E on December 31, 2023. E (through E’s executor, G, also not a citizen or permanent resident) is exempted under s. 6(7)(h) for 2022 and 2023 regarding E’s ½ deemed interest because E died in the year or the prior year.
• F is exempted under s. 6(7)(j) in each of the years for F’s deemed ½ interest because the co-owner died in the year or prior year and E’s ownership percentage at the time of death was at least 25%.

Two (apparent) joint tenants deemed to each have a 50% ownership percentage

Example 3

• E and F (each not a citizen or permanent resident) are spouses and (apparently) joint tenants.
• Since the registered title does not indicate their percentage ownership, they are deemed to each have an “ownership percentage” of 50% under the term’s definition.

Requirement to obtain UHTA clearance certificate before an executor makes a distribution

Clearance certificates

The representative of a deceased individual’s estate must obtain a clearance certificate from the Canada Revenue Agency (CRA) before the representative distributes any property belonging to the estate.

Generally, a clearance certificate confirms that all amounts of the underused housing tax and any other amounts (such as penalties and interest) that are payable by the deceased individual and by the representative, have been paid at the time the certificate is issued.

If a representative distributes property belonging to the estate before obtaining a clearance certificate from the CRA, the representative may be personally liable for paying any outstanding amounts.