Friday, October 07, 2005
Goods and Services Tax (GST) on Property under Construction: the New Residential Rental Property Rebate.
- an unoccupied new residential complex and intend to resell or lease or lease to persons who are acquiring the complex in the course of a business; or
- an interest in the complex while the complex is under construction or substantial renovation;or
- a commercial real property to be converted into a residential complex
then you may be eligible for a GST residential rental property rebate if the complex qualifies for the rebate. In all cases the rebate applies to real property that is or will be used as residential real property for the first time. In fact, to be more specific
a qualifying residence includes:
- a residential unit that the person possesses under an agreement of purchase and sale; or
- a residential unit in a residential complex that the person leases or sublets; or
- a detached house, semi-detached house, rowhouse unit, condominium unit, mobile home, floating home or apartment; or
- a suite or room in a hotel, a motel, an inn, a boarding house or a lodging house, or in a residence for students, seniors, individuals with a disability.
In addition, in order to qualify for the rebate all the following conditions must be met:
- The unit is a self-contained residence.
- The person holds the unit to: a) make an exempt lease or sub-lease of the unit; or b) make an exempt sale of the unit and an exempt lease of the land; or c) occupy the unit as a primary place of residence as long as another unit situated in the same complex is leased to another person on an exempt basis.
- The first use of the unit will be - or can reasonably be expected to be: a) the primary place of residence of the person or a lessor who will occupy the unit continuously for one year; or b) the primary place of residence of the person or lessor who will occupy the unit continuously for less than one year if, after that shorter period, the unit is sold to someone who will occupy the unit as a primary residence; or c) if ninety percent or more of the residential units of a residential complex that contains ten or more residential units qualify for the rebate. In this instance, all residential units in the complex are considered qualifying residential units.
Are you eligible to claim the rebate? You may be if:
- you buy a taxable residential complex or an interest in the complex from a builder and you lease units in the complex;
- you are a builder who constructs or substantially renovates a residential complex, makes an addition to a multiple unit residential complex, or converts a commercial real property into a residential property and you lease units in the complex;
- you are a builder who constructs or substantially renovates a residential complex, makes an addition to a multiple unit residential complex, or converts a commercial real property into residential property; and you sell the building or part of it, and you lease the land;
- you lease land to a person who will affix a residential unit to the land;
- you lease sites in a residential trailer park.
Finally, there are four different types of rebate applications.
I would like to thank these two readers for posing me these questions and trust the above post will be satisfactory. Additional information can be gather from the Canada Customs and Revenue Agency's website at www.ccra-adrc.gc.ca. . I also would like to invite all readers to submit questions online using the 'comments' section of this Blog. This way all requests will be publicized as well. You do not need to leave your e-mail address if you do not want to. As always, all questions will be answered.
I wish you a Happy Thanksgiving and, to all my American friends, a Happy Columbus Day.
Luigi Frascati
