- Joined
- Aug 30, 2007
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- 15
There are two GST rebates that people who purchase new residential property need to know about. (New residential property includes single family homes, townhouses, and condos).
1) New Housing Rebate / Rental Property Rebate
2) Transitional Rebate
New Housing Rebate / Rental Property Rebate
When you purchase a new residential property they are going to ask you certain questions to determine if you qualify for a GST rebate called the "New Housing Rebate".
Generally individuals are eligible for the New Housing Rebate when they purchase a property costing less then $450,000 that they plan to use as their primary residence.
If you are purchasing the property as a rental property then it will not be your primary residence. It is sometimes incorrectly suggested that the purchaser should just say they are moving in even when they know they are not so that they can get the New Housing Rebate. Not only is lying about your intention to move into the property fraud but it is also completely unnecessary as there is a rebate available to landlords that purchase new residential property, it is called the "New Residential Rental Property Rebate".
How the rebate for landlords works is that you tell the builder that the property you are purchasing will not be your primary residence. The builder will then charge you the full GST. Once you have possession of the property and your tenant has moved in you can apply for a GST Rebate and will end up in the same position as someone eligible for the New Housing Rebate.
The form you need to complete to get the rebate is GST524
http://www.cra-arc.gc.ca/E/pbg/gf/gst524/gst524-09e.pdf
Please note the Rental Property Rebate is not available on properties that are being flipped, as such the government will ask you to send a copy of your lease agreement, a one-year lease with your tenant is likely what the government will want to see.
Transitional Rebate
On July 1, 2006 the GST rate dropped from 7% to 6%. On January 1, 2008 the GST rate dropped from 6% to 5%. If you entered into a contract to purchase a new residential property before one or both of the above GST rate drops and took possession after the date of the rate drop you may be eligible for a rebate of 1% or 2% of the GST you paid.
For example, if you signed your purchase agreed in August 2007 (when the GST rate was 6%) and took possession of the property in May of 2008 (when the GST rate was 5%) you can apply for a 1% GST rebate on the purchase price of the property.
Another example, if you signed your purchase agree in April 2006 (when the GST rate was 7%) and took possession of the property in February 2008 (when the GST rate was 5%) you can apply for a 2% GST rebate on the purchase price of the property.
The form you need to complete to get the transitional rebate is GST193
http://www.cra-arc.gc.ca/E/pbg/gf/gst193/README.html
The transition rebate applies to both the purchase of rental property and the purchase of your primary residence.
1) New Housing Rebate / Rental Property Rebate
2) Transitional Rebate
New Housing Rebate / Rental Property Rebate
When you purchase a new residential property they are going to ask you certain questions to determine if you qualify for a GST rebate called the "New Housing Rebate".
Generally individuals are eligible for the New Housing Rebate when they purchase a property costing less then $450,000 that they plan to use as their primary residence.
If you are purchasing the property as a rental property then it will not be your primary residence. It is sometimes incorrectly suggested that the purchaser should just say they are moving in even when they know they are not so that they can get the New Housing Rebate. Not only is lying about your intention to move into the property fraud but it is also completely unnecessary as there is a rebate available to landlords that purchase new residential property, it is called the "New Residential Rental Property Rebate".
How the rebate for landlords works is that you tell the builder that the property you are purchasing will not be your primary residence. The builder will then charge you the full GST. Once you have possession of the property and your tenant has moved in you can apply for a GST Rebate and will end up in the same position as someone eligible for the New Housing Rebate.
The form you need to complete to get the rebate is GST524
http://www.cra-arc.gc.ca/E/pbg/gf/gst524/gst524-09e.pdf
Please note the Rental Property Rebate is not available on properties that are being flipped, as such the government will ask you to send a copy of your lease agreement, a one-year lease with your tenant is likely what the government will want to see.
Transitional Rebate
On July 1, 2006 the GST rate dropped from 7% to 6%. On January 1, 2008 the GST rate dropped from 6% to 5%. If you entered into a contract to purchase a new residential property before one or both of the above GST rate drops and took possession after the date of the rate drop you may be eligible for a rebate of 1% or 2% of the GST you paid.
For example, if you signed your purchase agreed in August 2007 (when the GST rate was 6%) and took possession of the property in May of 2008 (when the GST rate was 5%) you can apply for a 1% GST rebate on the purchase price of the property.
Another example, if you signed your purchase agree in April 2006 (when the GST rate was 7%) and took possession of the property in February 2008 (when the GST rate was 5%) you can apply for a 2% GST rebate on the purchase price of the property.
The form you need to complete to get the transitional rebate is GST193
http://www.cra-arc.gc.ca/E/pbg/gf/gst193/README.html
The transition rebate applies to both the purchase of rental property and the purchase of your primary residence.