Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
GST/HST Rulings Directorate
5th floor, Tower A, Place de Ville
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 247959
Business Number: N/A
Dear [Client]:
Subject: GST/HST interpretation
Rebate for newly purchased 8-plex in […]
Thank you for your correspondence received on [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to a purpose-built rental housing (PBRH) rebate for the tax payable on a newly purchased 8-plex in […].
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
We understand that you are in the process of purchasing a block of dwelling units in […]. They are currently being constructed and you have entered into an agreement to purchase them upon their completion in the fall of 2024. The block will consist of four separately titled properties where each titled property will consist of two dwelling units. Each dwelling unit will contain a private kitchen, a private bathroom and a private living area. Each dwelling unit will have a private entrance where a person is not required to enter the living area of another dwelling unit to enter a particular dwelling unit. Each property is not a residential condominium unit. Each titled property has a fair market value in excess of $450,000. All eight dwelling units are intended for long-term residential rental purposes.
INTERPRETATIONS REQUESTED
You would like to know:
1. Whether the block of dwelling units would need to have a single title to qualify for the PBRH rebate.
2. If you were to consolidate the block of dwelling units into a single title after its purchase, whether the purchase of the four titled properties would qualify for a PBRH rebate.
INTERPRETATIONS GIVEN
Interpretation 1
The PBRH rebate is available to a purchaser of purpose-built rental housing for 100% of the GST payable on its purchase where certain conditions are met. One of the conditions for rebate eligibility is that, generally, the construction of the purpose-built rental housing must begin after September 13, 2023 but before 2031 and must be substantially completed before 2036.
In addition, generally, the property the purchaser received must be a multiple unit residential complex where all of the following conditions are met:
- the multiple unit residential complex includes at least four residential units and at least four of those units each contains private kitchen facilities, a private bath and a private living area, or at least ten residential units; and
- 90% or more of the residential units that form part of the multiple unit residential complex are qualifying residential units held for the purpose of making certain exempt supplies of the unit or making exempt supplies that include giving possession or use of a unit to a person for occupancy of the unit as an individual’s place of residence.
A “multiple unit residential complex” is defined as a residential complex that contains more than one residential unit, but does not include a condominium complex.
A “residential complex” is generally defined to include that part of a building in which one or more residential units are located together with appurtenances and related land. It is also defined to include that part of a building that is the whole or part of a semi-detached house, rowhouse unit, residential condominium unit or other similar premises that is, or is intended to be, a separate parcel or other division of real property owned, or intended to be owned, apart from any other unit in the building, and a residential unit, together with the proportionate share of common areas, appurtenances and related land.
A “residential unit” generally includes a detached house, semi-detached house, rowhouse unit, condominium unit or apartment that is occupied or is intended to be occupied by an individual as a place of residence or lodging.
Furthermore, there is a special rule under paragraph 256.2(8)(b)(i) for purposes of the PBRH rebate which generally states that where a multiple unit residential complex contains only two residential units, the residential complex is considered to be a single unit residential complex and not a multiple unit residential complex.
Therefore, where each titled property that is purchased only contains two residential units, it is not considered to be a multiple unit residential complex. As a result, all of the conditions for a PBRH rebate would not be met where four separately titled properties are purchased. Specifically, the residential complex being purchased is not a multiple unit residential complex that includes at least four residential units. Therefore, the purchaser would not be entitled to a PBRH rebate for such a purchase.
However, if a person purchases a single titled property where there is a new building containing at least four residential units each containing private kitchen facilities, a private bath and a private living area and each of those units is to be supplied to an individual for long-term residential rental as their place of residence, a PBRH rebate may be available to the purchaser for the GST paid on the purchase of that property.
Interpretation 2
As indicated in interpretation 1 above, the property must meet all of the conditions for a PBRH rebate at the time of purchase. It does not matter whether the purchaser consolidates, or intends to consolidate, the separate properties into one property after their purchase.
As stated above, where each separately titled property that is purchased only contains two dwelling units at the time of purchase, it is not considered to be a multiple residential complex at that time. As a result, all of the conditions for a PBRH rebate would not be met. Specifically, the residential complex being purchased is not a multiple unit residential complex that includes at least four residential units. The purchaser would not be entitled to a PBRH rebate for such a purchase.
DISCLAIMER
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service, the interpretation(s) given in this letter, including any additional information, is not a ruling and does not bind the Canada Revenue Agency (CRA) with respect to a particular situation. Future changes to the ETA, regulations, or the CRA’s interpretative policy could affect the interpretation(s) or the additional information provided herein.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 306-914-1122.
Should you have additional questions on the interpretation and application of the GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Sincerely,
Ron Litzenberger
Industry Sector Specialist
Real Property Unit 1
Financial Institutions and Real Property Division
GST/HST Rulings Directorate
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