Real Estate and GST

“You don’t pay taxes—they take taxes.”

– Chris Rock

Home prices continue to push higher, despite a foreign buyers tax, empty homes tax, speculation tax, mortgage stress test, and record new home completions. While complex in nature, the implications of not understanding the different taxes can be costly.

A Kelowna REALTOR® was recently fined $172,400 for not advising their clients on B.C.’s foreign buyer tax—a tax rate of 20% on the fair market value. It’s added to the Property Transfer Tax when a foreign citizen or non-permanent resident of Canada purchases a residential property in Metro Vancouver.

The purpose of this article focuses on GST applicable to the sale of real estate. The Federal government considers a transfer of unoccupied inventory GST payable. For certain property types, such as those situated in the Agriculture Land Reserve, partial GST is applicable. You may be eligible for a new housing rebate for some of the GST/HST paid.

Here are scenarios where GST may or may not apply:

GST Applicable

  • Never lived in homes;
  • Substantially renovated homes (down to the studs);
  • Strata hotel;
  • Short term rental property;
  • Mixed used property; and
  • Assignment of presales.

GST Maybe Applicable

  • Farmland;
  • Vacant land;
  • Seller is a corporation;
  • Resort properties and vacation homes;
  • Tear down resold as land only; and
  • Sale of a house for relocation to a new lot.

[Disclaimer: this article is for informational purposes only, and you should seek independent legal and/or accounting advice if GST is or might be applicable. Contact me if you need a referral.]

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Adam Naamani

Real estate specialist, tech entrepreneur, programmer, martial artist.

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