Rental Property GST Rebate for New Residential Homes
Every investor who purchased a pre-construction property in Calgary needs to look at this - you may be eligible for a GST rebate up to $6,300 after closing! This rebate must be applied for within two years after the tax first becomes payable.
For complete details refer to the Government of Canada website.
GST Rebate Overview
When you buy a pre-construction property in Canada, you have to pay the GST on the builder’s purchase price. As a residential landlord, you cannot claim an input tax credit (ITC) to recover the GST paid because long-term residential leases are exempt from GST/HST. For qualifying purchases, there is a rebate for a portion of the GST know as the “GST/HST New Residential Rental Property Rebate” - this is money paid straight back into your pocket.
Which Properties Qualify
Only new residential units that meet these criteria will qualify for the rebate
You purchased and closed on a newly constructed residential unit from a developer
The Fair Market Value is less than $450,000
You paid GST on the Fair Market Value of the unit
You intent to rent the unit out to a tenant (a different New Housing Rebate is available if you plan to live in the property yourself)
NOTE: If the the unit is sold within one year after it is first occupied as a place of residence after its construction, you will be required to repay the rebate!
How Is the Rebate Calculated?
Note: Purchase Price is the Purchase Price excluding the GST
Purchase Price is Less Than Or Equal to $350,000 = PURCHASE PRICE x 5% x 36%
Purchase Price is Between $350,000 and $450,000 = ( $450,000 - PURCHASE PRICE ) / $100,000 x $6,300
Purchase Price is Greater than $450,000 = $0 (not eligible for a rebate)
When Can you Apply for the Rebate
If you purchase a qualifying residential unit that is a residential condominium unit where possession of the unit is transferred to you before the complex is registered as a condominium, the tax is payable on the day that is the earliest of the following dates:
the day that ownership of the unit is transferred to you
the day that is 60 days after the day the complex is registered as a condominium
Example:
Claire enters into an agreement to purchase a residential condominium unit on September 15, 2017. Claire takes possession of the unit and her tenant occupied the unit on March 1, 2019. The complex is registered as a condominium on May 1, 2019. The deed of ownership is transferred to Claire on June 1, 2019. Since tax is payable on the earlier of the day ownership is transferred (June 1, 2019) and 60 days after the complex is registered as a condominium (June 30, 2019), June 1, 2019, is the day that tax is payable.
Application for the Rebate
Rebate Application Form: GST524 GST/HST New Residential Rental Property Rebate Application
All eligible claimants, regardless of the application type, must fill out parts A, B, C, and F of the Government of Canada’s Rebate Application form.
NOTE: You must apply for the rebate within two years after the end of the month in which tax first becomes payable on the unit or you will no longer qualify for the rebate!
I recommend having someone that specializes in the preparation of GST rebates to complete your rebate for your - the forms and process tend to be complicated and confusing for most people (contact me if you need assistance and I will refer you to a trusted partner).
Disclaimer
This does not constitute legal advice. Each person’s situation is different so please contact the Government of Canada or an accountant to help determine your eligibility and to assist in submitting an application.