HST TAX ON PRECONSTRUCTION HOMES/INVESTMENT PROPERTY

  • COCO

    Status: Forum Member

    Posts: 1
    Joined: 28 Apr 2010
    From:

    I am interested in purchasing a new home from construction. If you decide to sell or turn your home into an investment after the closing date. Will I be charged an full HST tax? Even if the house is less than $400 000?

    I am aware that if you purchase a brand new home from the contractor at a value of $400,00 or more you will be charged HST. I'm just wondering if you have to if its less and you are turning your property into an investment property or planning to resell it soon after the closing date?????
  • REINteam

    Status: Forum Member

    Posts: 1,556
    Joined: 22 Aug 2007
    From:

    My first question to you would be what province are you looking to purchase in? HST laws differ on purchasing a home from BC to Ontario and the Maritime provinces.

    Ray Reuter
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  • MrHamilton

    Status: REIN™ Member

    Posts: 258
    Joined: 11 May 2008
    From: HAMILTON

    Hi Coco,

    I'm in the same boat and have done hours of research into this. I guess that's what they call due diligence!!

    I'm in Ontario so my knowledge is specific to Ontario and here's a few things.

    You buy a new house, you're subject to HST and normally the builder includes it in the price. If you are buying for personal use then you would likely sign a document with the builder stating you are assigning the HST rebates to the builder to collect which is roughly 7.8% (this number declines as you go over 350K) of the 13% HST

    If your intention is for a rental, then you may not assign the rebates to the builder so the builder is out 7.8% which the investor must then come up with on closing. But all is not lost, the CRA offers the same rebates to buyers of new long term rental properties so you as the investor must apply for the rebate yourself which you can do as soon as you have a signed 12 month lease and a statement of adjustments. So the first lease must be at least for 12 month and do not sell within the first year inorder to comply with the rules of the HST rebates. ETA to have the application completed is approx 6 weeks.

    On my blog, I've written up the results of my research here: http://www.mrhamilton.ca/?p=36 with links to specific sites and forms on CRA's website.

    Hope that helps and happy investing!!!
    Erwin

    QUOTE (COCO @ Sep 15 2010, 04:53 PM)
    I am interested in purchasing a new home from construction. If you decide to sell or turn your home into an investment after the closing date. Will I be charged an full HST tax? Even if the house is less than $400 000?

    I am aware that if you purchase a brand new home from the contractor at a value of $400,00 or more you will be charged HST. I'm just wondering if you have to if its less and you are turning your property into an investment property or planning to resell it soon after the closing date?????

    Erwin Szeto | Real Estate Salesperson | Rock Star Real Estate Brokerage, Inc. | MrHamilton.ca | REIN Ambassador Erwin@MrHamilton.ca

    Fast Track Your Investment Career: FREE Hamilton Investor Training - Reserve Your Seat Here

    REIN 2013 Michael Millenaar Memorial for Leadership award winner and 2013 Top Player of the Year Award Recipient
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