Hello EveryoneHere is an e-mail I got from Laura Holland -a real estate lawyer in Coquitlam BC -worth reading
Happy New Year everyone!
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I hope everyone had a great holiday! (I certainly did).
Here is my latest concern for clients which I want to share with you.
NOT ALL PURCHASERS WILL QUALIFY FOR A GST REBATE FOR RENTAL PROPERTIES
I have run across this issue for a few clients, who were caught off-guard, so I thought I’d pass it along. This is my old law school way of writing notes, so I hope it is clear!
FACTS: A client enters a contract for a presale condo. The purchase price on the contract with the developer is $349,000 plus GST. By the time the property is ready, the fair market value is $452,000. The client pays the full GST on $349,000 at the time of Completion to the developer. The client rents the property for one year, and applies for the GST New Housing Rental Rebate.
ISSUE: Will the client qualify for the 36% Rebate on GST paid at the time of Completion?
SHORT ANSWER: NO.
REASON: The GST Rebate entitlement is based on the Fair Market Value of the property at the time of Completion. In this case, because the Fair Market Value is over $450,000, no rebate is allowed.
Assuming all other criteria are met, a 36% Rebate for GST paid at completion is allowed for properties valued under $350,000 at the time of Completion.
A partial rebate is allowed for properties between $350,000 and $450,000 at the time of Completion. No Rebate is allowed for properties valued at more than $450,000 at the time of Completion.
With clients purchasing pre-sales with the hope that the value will increase before Completion, this may be an issue that they had not anticipated.
I called Revenue Canada about this issue, and was directed to the Rental Rebate Form (a current copy of which is attached). If you look at Section E Part I, lines D and E, you will see that you must report both the purchase price paid, and the fair market value of the property. This is specifically so that the GST folks can identify properties that have gone up in value, and may not qualify for all or part of the rebate.
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I asked how a client would know the fair market value at the time of completion, and was told that Revenue Canada expects the clients to make their best efforts to get an estimate of this figure. They said it was not necessary to order an appraisal, but that they should “maybe ask their realtor!” Good luck everyone!
If you have any questions about this or other legal matters, I am always happy to take your call.
Sincerely,
HOLLAND LAW GROUP
L. Holland
Laura Holland
Solicitor
#207 - 3975 North Road-->
Burnaby, BC V3J 1S2
P 604 421 6111
F 604 421 6119
Happy New Year everyone!
[/size]
I hope everyone had a great holiday! (I certainly did).
Here is my latest concern for clients which I want to share with you.
NOT ALL PURCHASERS WILL QUALIFY FOR A GST REBATE FOR RENTAL PROPERTIES
I have run across this issue for a few clients, who were caught off-guard, so I thought I’d pass it along. This is my old law school way of writing notes, so I hope it is clear!
FACTS: A client enters a contract for a presale condo. The purchase price on the contract with the developer is $349,000 plus GST. By the time the property is ready, the fair market value is $452,000. The client pays the full GST on $349,000 at the time of Completion to the developer. The client rents the property for one year, and applies for the GST New Housing Rental Rebate.
ISSUE: Will the client qualify for the 36% Rebate on GST paid at the time of Completion?
SHORT ANSWER: NO.
REASON: The GST Rebate entitlement is based on the Fair Market Value of the property at the time of Completion. In this case, because the Fair Market Value is over $450,000, no rebate is allowed.
Assuming all other criteria are met, a 36% Rebate for GST paid at completion is allowed for properties valued under $350,000 at the time of Completion.
A partial rebate is allowed for properties between $350,000 and $450,000 at the time of Completion. No Rebate is allowed for properties valued at more than $450,000 at the time of Completion.
With clients purchasing pre-sales with the hope that the value will increase before Completion, this may be an issue that they had not anticipated.
I called Revenue Canada about this issue, and was directed to the Rental Rebate Form (a current copy of which is attached). If you look at Section E Part I, lines D and E, you will see that you must report both the purchase price paid, and the fair market value of the property. This is specifically so that the GST folks can identify properties that have gone up in value, and may not qualify for all or part of the rebate.
-fonto:Arial-->
I asked how a client would know the fair market value at the time of completion, and was told that Revenue Canada expects the clients to make their best efforts to get an estimate of this figure. They said it was not necessary to order an appraisal, but that they should “maybe ask their realtor!” Good luck everyone!
If you have any questions about this or other legal matters, I am always happy to take your call.
Sincerely,
HOLLAND LAW GROUP
L. Holland
Laura Holland
Solicitor
#207 - 3975 North Road-->
Burnaby, BC V3J 1S2
P 604 421 6111
F 604 421 6119
