Remitting GST on a new build -

Sam53473

Inspired Forum Member
Registered
Aug 30, 2015
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Vancouver
#1
Hi,

My husband and I are closing on an investment property in BC. It is new construction, subject to GST and solely purchased for investment (not primary res). I've been told to acquire a GST # in order to remit the GST however the builder (seller) wants to do the same... the lawyers are in a bit of a stale mate and I'm not even sure if this is worth arguing about.

To complicate matters, my husband and I each have separate GST numbers however the builder is insisting that we must have one single number listed under both our names or they will not allow it. I know I can register us as a partnership and obtain one but is it necessary?

Can someone please tell me;

1). Is there a financial benefit to remitting the GST when the purchase price is over $450,000 (provincial legislation only allows a % GST rebate up to $450,000 from what I've read)

2). If there is a financial benefit, do we really need to register as a partnership and obtain a GST # through the CRA in order to remit?

Thank you very much for any help with this.. we close in less then a week!!!
 

Matt Crowley

Senior Forum Member
Registered
Dec 14, 2013
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Calgary
#2
On a $450,000 purchase this is definitely worth discussing! Why is there a requirement that you need a GST number to purchase a home? Sounds like the builder is hoping to underwrite the GST himself in which case you would need a GST number which seems a bit weird unless I am missing something. Ultimately the final buyer has to pay the GST which is you. What is the issue with that?
 
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Sam53473

Inspired Forum Member
Registered
Aug 30, 2015
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Vancouver
#3
On a $450,000 purchase this is definitely worth discussing! Why is there a requirement that you need a GST number to purchase a home? Sounds like the builder is hoping to underwrite the GST himself in which case you would need a GST number which seems a bit weird unless I am missing something. Ultimately the final buyer has to pay the GST which is you. What is the issue with that?

I'm super confused about the whole ordeal. I believe you're right Matt, I'm fairly confident the builder wants to underwrite the GST which is causing the issue.

Apparently when people purchase new homes subject to GST, the usual process is buyer pays full price (inclusive of GST) and builder remits the GST through their business. I just don't want to fight it unless I know I can underwrite a portion of it myself. All I've been able to find in provincial legislation is that if purchased for investment purposes, you can claim a percentage of the GST on properties under $450,000. Anything more you can not which would end the discussion for me as the house was $485,000. I'm just not sure if I'm missing anything else.
 

Sherilynn

Real Estate Maven
REIN Member
Oct 22, 2007
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Edmonton
www.qdhomequest.com
#4
Could you not simply buy the property with GST included and let the builder remit, so the amount would be included in your mortgage rather than out of pocket?

The bulk of our business income isn't subject to GST, so registration is optional for us. When we had 3 duplexes built, we decided not to register for a GST number because we would then have to pay GST out of pocket rather than in the mortgage, plus we'd be stuck filing for GST every year when we wouldn't otherwise need to.

I think you should have the choice as to whether you or the builder remits the payment. I got my answer from my tax accountant, so perhaps that's whom you should consult.
 

Albert710

New Forum Member
REIN Member
Apr 30, 2015
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#5
There is a guide from CRA that may provide some information with respect to your purchase of a investment (new residential property). Here I assume that you are purchasing a property which is not a commercial property. If this is the case, please have a look at

http://www.cra-arc.gc.ca/E/pub/gp/rc4231/rc4231-10-16e.pdf

This is Guide RC4231 New Residential Property Rebate as well as GST 524 below.

http://www.cra-arc.gc.ca/E/pbg/gf/gst524/README.html.

In Guide RC4231 you may want to look at page 11 under the title Purchaser/Landlord

Here I am assuming you are going to be the landlord of this new investment property to be rented out to residential tenants.

Finally, there is a phone number at Canada Revenue Agency 1-800-959-8287 which can help you obtain information regarding GST interpretations. They usually provide good explanations and in so doing.

Hope this helps.
 

Sam53473

Inspired Forum Member
Registered
Aug 30, 2015
34
8
8
Vancouver
#6
There is a guide from CRA that may provide some information with respect to your purchase of a investment (new residential property). Here I assume that you are purchasing a property which is not a commercial property. If this is the case, please have a look at

http://www.cra-arc.gc.ca/E/pub/gp/rc4231/rc4231-10-16e.pdf

This is Guide RC4231 New Residential Property Rebate as well as GST 524 below.

http://www.cra-arc.gc.ca/E/pbg/gf/gst524/README.html.

In Guide RC4231 you may want to look at page 11 under the title Purchaser/Landlord

Here I am assuming you are going to be the landlord of this new investment property to be rented out to residential tenants.

Finally, there is a phone number at Canada Revenue Agency 1-800-959-8287 which can help you obtain information regarding GST interpretations. They usually provide good explanations and in so doing.

Hope this helps.
Thank you so much, this was most helpful. I do appreciate it.
 

nubiwan

Inspired Forum Member
Registered
Aug 20, 2009
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#7
My understanding is that a new building is subject to HST to the buyer. So the $450 would be subject to whatever taxes levied in your province, or it might be built in. The builder remits for a GST rebate against any materials and labour they paid taxes on during construction. Belive they are input tax credits.

What you need to find out, is if the $450 selling price is inclusive of taxes or not. Your $450 could become $500 plus with 13% sales tax.

I stand to be corrected, but that's my understanding.