17 July 1998 GST/HST Interpretation HQR0001009 - GST/HST New Housing Rebates

                                                                        GST/HST Rulings and Interpretations
  Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Road
Vanier, Ontario
XXXXX                                                                                 K1A 0L5

Dear XXXXX

We are writing in response to a letter from XXXXX of your office dated December 23, 1997 respecting multiple rebate applications for side by side strata lots with no common wall.

Facts

Our understanding of the facts is based upon a letter from XXXXX dated December 23, 1997 and attachments including a letter from the client, a purchaser's statement of adjustments for one of the strata lots and an agreement of purchase and sale for one of the strata lots, and upon a letter from XXXXX Audit Technical Advisor in XXXXX[.]

1. A husband and wife purchased two side by side strata lots in a new condominium complex. The wife is suffering from XXXXX and the intention behind the purchase was to use the two strata lots as a single residence, with modifications to XXXXX[.]

2. The two strata lots are not separated by a party wall. It is unclear from the facts whether the strata lots were built without the wall, or whether the wall was removed after the agreement of purchase and sale was signed or after closing.

3. The cost of each strata lot was around XXXXX[.]

4. Separate GST/HST new housing rebate rebate applications have been filed with respect to each strata lot. The first rebate has already been paid to the husband in respect of one of the strata lots. The second application made by the wife is still under review.

Interpretation Requested

We have been asked to consider whether the purchasers are eligible for a separate GST/HST new housing rebate rebate in respect of the acquisition of each of the strata lots in the building, to be calculated on the value of each lot individually, or whether, only one rebate is available for the two strata lots as a whole, to be calculated on the total value of the strata lots.

Interpretation Given

Based on the information provided we conclude that a separate GST/HST new housing rebate rebate application should be allowed with respect to each lot in the building. The rebate calculation for each rebate should be based on the cost of the lot that was acquired by the applicant without reference to the purchase price of the abutting lot.

Analysis

Paragraph 254(2)(a)

Provided that all the other conditions in subsection 254(2) are met, paragraph 254(2)(a) provides a GST/HST new housing rebate rebate whenever the builder makes a sale of a residential condominium unit, ie. a strata lot, to a particular individual. The wording of the paragraph attaches a rebate to each strata lot rather than to the house as a whole.

Paragraph 254(2)(b)

At the time that the purchasers became liable under the agreement of purchase and sale to acquire the strata lots their intention was to use both strata lots as a single primary residence. Thus the condition in paragraph 254(2)(b) is satisfied.

There is nothing in paragraph 254(2)(b) or in any of Revenue Canada's administrative policies that limit the size of a primary residence to a single strata lot. In this case, each strata lot was intended to form part of a primary residence and since the rebate is payable whenever a builder sells a strata lot rather than when a builder sells a primary residence, there is no legislative provision that would exclude the payment of two rebates.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-4393.

Yours truly,

Michael Ezri
A/Rulings Officer
Real Property Unit
Financial Institutions and Real Property Division
GST/HST Rulings and Interpretations Directorate