If you are purchasing a newly constructed or substantially renovated residential property for rental purposes, the purchase price will be subject to goods and services tax (“GST”). However, you may qualify for a rebate of a portion of the GST payable through the Canada Revenue Agency’s (“CRA”) “GST/HST New Residential Rental Property Rebate.”
The GST/HST New Residential Rental Property Rebate is similar to the CRA’s GST/HST New Housing Rebate in that the purchase price of the property must be less than four hundred fifty thousand ($450,000.00) dollars, before tax, and that the rebate amount is calculated using the same formula (e.g. GST paid multiplied by 36%, up to a maximum of $6,300.00).
Unlike the GST/HST New Housing Rebate, the GST/HST New Residential Rental Property Rebate does not require you to buy or build the property for use as your “primary place of residence”. Rather, you may qualify for the GST/HST New Residential Rental Property Rebate in certain circumstances, including but not limited to:
(1) if you purchased or built a newly constructed residential property from a builder for rental purposes;
(2) if you substantially renovated a residential property for rental purposes;
(3) if you converted a commercial property into a residential rental property; or
(4) if you leased land to another person for residential purposes.
A buyer will not be eligible for the GST/HST New Residential Rental Property Rebate if they are also entitled to claim the GST/HST New Housing Rebate, whether the rebate is paid to you or credited to you by the builder.
In order to apply for the GST/HST New Residential Rental Property Rebate, a buyer must submit a GST/HST New Residential Rental Property Rebate Application to the CRA along with a copy of the rental or lease agreement. If applying in respect of a recently purchased new residential rental property, then we would also recommend submitting a copy of the purchase contract. The CRA may require further information or documentation.
At KH/Dunkley Law Group, we make sure that our clients have the information they need in order to determine their rebate eligibility and apply for the credit. If you are purchasing a new residential property, be sure to contact our office for more information regarding the GST/HST New Housing Rebate and the GST/HST New Residential Rental property Rebate.