Frequently Asked Questions about GST
How does GST work?
The Goods & Sales Tax is a 5% federal tax which is added at the point of sale. In real estate it applies to the purchase of new construction, some vacant land, and on the resale of property that has been rented out for short term rentals (less than 1 month)
The payment of GST can be deferred if the purchaser continues offering the property for short term rental and becomes a GST registrant. GST registrants are entitled to claim credits for the GST paid on legal fees, property management fees, and utilities such as electricity, gas, cable and telephone. Registrants are required to collect and remit GST on the short term rentals, which in some cases may be done through a property manager. An annual GST return must be filed and is fairly straightforward.
GST on New Homes
When you buy a newly constructed home, condominium or townhouse, the entire purchase price including land is taxable. If the home is going to be your primary place of residence, it may qualify for a partial GST rebate.
GST on Resale Homes
There is no GST on the purchase price of a resold residential property that has been occupied as a residence before you bought it. Resale residential property includes an owner occupied house, condominium, apartment, summer cottage, vacation property or non-commercial hobby farm. Resale property can also mean a recently built house that is substantially complete and has been sold at least once before you buy it.
Buyers should consult their tax advisors prior to entering into any agreement to purchase real estate.