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Mar 2020

Qualifying for the GST/HST New Residential Rental Property Rebate

By Samantha Ahn

Are you considering the purchase of investment property for additional income or retirement planning?  Not all purchasers realize that if you purchase a new property for investment purposes, HST is applicable on the purchase price.  Even fewer purchasers are aware that the government offers an important tax rebate for newly constructed investment property.  We recommend that you fully consider the prerequisites of the New Residential Rental Property Rebate before entering into an agreement to purchase a new home for investment purposes.

Requirements for the New Residential Rental Rebate

First, the property must be considered to be:  a purchase of a newly constructed home from a builder, or a substantial renovation or a conversion project.

Second, the first use of the property must be to lease the property to tenants for a period of at least one (1) year. The tenants must be individuals (as opposed to leasing under a corporation) and the tenants must use the property for residential purposes only.  

Third, you must have paid GST/HST on the purchase of the new property at closing.  If you have constructed a new home yourself or hired someone to construct a new home or renovate housing, you are considered to have made a self-supply and to have paid and collected tax on the fair market value of the property.

Fourth, you must submit to CRA a copy of the one year written lease agreement along with your complete rebate application. 

The rebate rate is calculated based on the total tax amount paid for the purchase, the purchase price of the property, and the fair market value of the property on the closing date.  When the fair market value of the property exceeds $450,000.00, you will be entitled to claim only the GST portion of the New Residential Rental Rebate. 

The residential real estate lawyers at SorbaraLAW are available to assist you in assembling your rebate applications should you require assistance. This article was written by Samantha Ahn, a qualified real estate lawyer with SorbaraLAW.  Samantha can be reached at (519) 741-8010 ext.295.

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