In a terse letter on Friday, a bipartisan group of members of the United States Congress asked US Secretary of State Antony Blinken to work with the Government of Canada and find a way to exempt Americans from the Underused Housing Tax.
"We write to you today to voice frustration and concern on behalf of our constituents impacted by the Government of Canada's recently-implemented Underused Housing Tax," the congress members wrote. "This 1% tax on vacant or underutilized properties owned by non-resident, non-Canadians, is unfairly impacting Americans who own property in Canada and putting the strong bond between our countries in jeopardy."
The letter was signed by Brian Higgins (D-NY-26), Claudia Tenney (R-NY-24), Joe Courtney (D-CT-2), Nicholas Langworthy (R-NY-23), Mike Kelly (R-PA-16), Andy Kim (D-NJ-03), Brian Mast (R-FL-21), Paul Tonko (D-NY-20), Jennifer Wexton (D-VA-10), Nancy Mace (R-SC-01), and Max Miller (R-OH-07).
"First proposed in the Government of Canada's Budget 2021 document, the Underused Housing Tax is now being implemented and Americans are receiving new tax bills on their properties in Canada," they continued. "As of the date of this letter, 403 Americans from across the country who own property throughout Canada have responded to a survey detailing the hardship the Underused Housing Tax would cause. Their stories show that Americans have owned these properties for generations, creating strong communities abroad and significantly contributing to the Canadian economy."
The congressmembers went on to say that they recognize that the Government of Canada introduced the Underused Housing Tax to curb foreign real estate speculation, but that Americans are "unfairly caught in its net."
They also note that although the Government of Canada has provided several exemptions, many properties do not qualify based on their location, and methods to submit documentation to prove exemption to the Canada Revenue Agency "are unclear."
The members of Congress are requesting that Blinken resolve the matter before October 31, 2023, when the Underused Housing Tax needs to be paid in order to avoid penalties or interest.
The additional 1% property tax was originally due by April 30, but the Government of Canada announced in March that it was postponing any potential fines for late filings -- which range from $5,000 to $10,000 -- until November 1.
"We urge you to address this important matter with the Government of Canada to preserve these historic
communities, maintain the binational economy that they support, and advocate for our constituents," the group said.
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The push is being led by Democratic member of Congress Brian Higgins of New York, who -- in a press release along with the letter -- called the Underused Housing Tax "an insulting and unjustified attack" on Americans who own property in Canada as a second home.
"The tax shouldn't be imposed on Americans," he said. "It sets a dangerous precedent for actions that damage a robust binational exchange."
Added Republican Congresswoman Claudia Tenney, also of New York: "Canada's Underused Housing Tax is a poorly conceived policy that threatens to drive a wedge between the United States and Canada. Many of my constituents have owned small homes or other properties in Canada for generations, and proposing this tax on them is unfair and unjust."
The episode resembles that of the notorious Foreign Buyer Ban. After the Foreign Buyer Ban was first revealed last year, the full regulations were not announced until late-December, ahead of the ban coming into effect on January 1. Many in the real estate development industry subsequently voiced frustration that they were unfairly caught by the regulations.
The Government of Canada ultimately amended the regulations in late-March.
