Harmonized Sales Tax: Proposed Enhancements to the British Columbia New Residential Rental Property Rebates

GST/HST Info Sheet GI-129
September 2012

This info sheet provides information about the proposed enhancements to the B.C. new residential rental property rebates for landlords of qualifying rental properties.

Information about the proposed enhancements to the B.C. new housing rebates for individuals who build or purchase their own new housing is provided in GST/HST Info Sheet GI-128, Harmonized Sales Tax: Proposed Enhancements to the British Columbia New Housing Rebates.

New housing

The term new housing used throughout this info sheet refers to newly constructed or substantially renovated housing. Housing that has been substantially renovated is generally given the same treatment under the GST/HST as newly constructed housing. Extensive modifications must have been made to the housing in order to meet the definition of a "substantial renovation" for GST/HST purposes. For a full explanation of the factors to consider in deciding if a substantial renovation has taken place, refer to Technical Information Bulletin B-092, Substantial Renovations and the GST/HST New Housing Rebate.

Enhanced rebates – Overview

The enhanced B.C. new residential rental property rebate would be available to a landlord who purchases new housing for rental purposes, or who constructs or substantially renovates housing for rental purposes, where the HST on the purchase or the self-supply, as the case may be, becomes payable on or after April 1, 2012 and before April 1, 2013, and the landlord qualifies for the existing B.C. new residential rental property rebate.

The enhanced rebate would also be available to a landlord who is liable for the HST under the self-supply rules when they first supply land alone under an exempt lease for residential use, provided the HST on the self-supply becomes payable on or after April 1, 2012 and before April 1, 2013, and the landlord qualifies for the existing B.C. new residential rental property rebate.

Refer to Guide RC4231, GST/HST New Residential Rental Property Rebate for information on the conditions and deadlines for claiming the new residential rental property rebate.

The calculation of the enhanced rebates would use the same method as that used for the existing B.C. new residential rental property rebates. Only the maximum rebate amounts would be changed, as explained later in this info sheet.

When does the GST/HST become payable on a purchase of new housing?

GST/HST generally becomes payable on the purchase of new housing on the earlier of:

• the day that ownership of the property is transferred to the purchaser; and
• the day that possession of the property is transferred to the purchaser under the agreement for the supply.

However, there is a special timing rule that applies to the purchase of a residential condominium unit if possession of the unit is transferred to the purchaser before the condominium complex in which the unit is situated is registered as a condominium. In that case, the GST/HST becomes payable on the earlier of:

• the day ownership of the unit is transferred to the purchaser; and
• the day that is 60 days after the condominium complex is registered as a condominium.

What is a self-supply?

The term "self-supply" describes a situation where a person is considered to have both made a taxable supply by way of sale of real property and, at the same time, to have repurchased that property. Under the self-supply rules, the person is also considered to have both collected and paid the GST/HST on the fair market value of the property.
Self-supply rules may apply to "builders" of new housing, and to landlords who lease land for residential purposes, whether they are GST/HST registrants or not.

"Builder" has a very specific meaning for GST/HST purposes that is not limited to a person who physically constructs housing. See Guide RC4052, GST/HST Information for the Home Construction Industry, for more information.

When does a self-supply of new housing occur?

A self-supply of new housing by a builder generally occurs at the later of

• the time construction or substantial renovation of the housing is substantially completed, and
• the time possession or use of the housing, or a unit in the housing, is given under a lease, licence or similar arrangement to an individual (or to a person who, in turn, will rent it to an individual), and the individual is the first to occupy the housing as a place of residence.

In the case of a builder-occupied home, a self-supply occurs at the later of

• the time construction or substantial renovation of the new housing is substantially completed, and
• the time the builder occupies the new housing as a place of residence.

In the case of a multiple-unit building (e.g., an apartment building) or an addition to the building, the self-supply occurs at the later of

• the time construction or substantial renovation of the building (or addition) is substantially completed, and
• the time possession or use of a unit in the building (or addition) is given to an individual who is the first to occupy a unit in the building (or addition) as a place of residence.

Where the builder sells the building part of the new housing and leases the related land to the purchaser under the same agreement (other than the sale of a mobile home together with a site in a residential trailer park), the self-supply occurs at the later of

• the time that the construction or substantial renovation of the housing is substantially completed, and
• the time possession or use of the housing is given under the agreement to an individual who is the first to occupy a unit in the housing as a place of residence.

When does the GST/HST become payable on a self-supply of new housing?

The GST/HST becomes payable (i.e., the builder is considered to have paid the GST/HST on the fair market value of the housing) at the time of the self-supply.

For a complete discussion on the self-supply rules for new housing, see Guide RC4052, GST/HST Information for the Home Construction Industry.

Self-supply of land for residential use

A person may be required to account for the GST/HST under the self-supply rules when they first supply land on an exempt basis for use as a place of residence.

For example, when a site in a residential trailer park is first rented on an exempt basis for a period of at least one month, the landlord is generally considered to have made a taxable self-supply of the entire residential trailer park.

In addition, where a landlord increases the size of an existing residential trailer park and first rents a site in the additional area on an exempt basis for a period of at least one month, the landlord is generally considered to have made a taxable self-supply of the additional land used in the residential trailer park.

The self-supply rules may also apply to land other than a residential trailer park where a landlord first supplies the land on an exempt basis to the owner, lessee or occupant of a residential unit that is or will be affixed to the land for use as a place of residence.

There are exceptions to these general self-supply rules. Refer to GST/HST Memorandum 19.2.3, Residential Real Property – Deemed Supplies.

When does the GST/HST become payable on a self-supply of land?

The GST/HST becomes payable, i.e., the landlord is considered to have paid the GST/HST on the self-supply, at the time the landlord first gives possession or occupancy of the land to a lessee under the rental arrangement.

Rebate for lease of house and land

The existing B.C. new residential rental property rebate for housing that is purchased, built or substantially renovated for rental purposes is equal to 71.43% of the 7% provincial part of the HST

• that is attributable to a "qualifying residential unit" (subject to a maximum rebate amount) and
• that a landlord
• paid on the purchase price of new housing and, if applicable, on the purchase of an interest in the new housing (e.g., where the previous purchaser assigns the purchase and sale agreement to the landlord on a taxable basis); or
• was deemed to have been paid under the self-supply rules;

The current maximum B.C. new residential rental property rebate that may be claimed for a qualifying residential unit is $26,250. For multiple-unit rental housing (i.e., generally, housing with more than two residential units), the maximum rebate of $26,250 applies for each qualifying residential unit.

The maximum B.C. new residential rental property rebate that may be claimed for a qualifying residential unit would be increased to $42,500 where the HST on the purchase or self-supply, as the case may be, becomes payable on or after April 1, 2012 and before April 1, 2013, and the landlord qualifies for the existing B.C. new residential rental property rebate.

For multiple-unit rental housing (i.e., generally, housing with more than two residential units), the maximum rebate of $42,500 would apply for each qualifying residential unit.

As a result, a purchaser of a residential complex with a purchase price attributable to each qualifying residential unit of up to $850,000 (before HST and rebates) would be eligible for a rebate of 71.43% of the provincial part of the HST paid, to a maximum rebate of $42,500 per qualifying residential unit. A builder of a residential complex with a fair market value attributable to each qualifying residential unit of up to $850,000 would be eligible for a rebate of 71.43% of the provincial part of the HST paid on the self-supply, to a maximum rebate of $42,500 per qualifying residential unit.

Where the purchase price or fair market value attributable to a qualifying residential unit is more than $850,000, the landlord would be eligible for the maximum rebate of $42,500 for the unit.

Refer to Guide RC4231, GST/HST New Residential Rental Property Rebate for information on the conditions and deadlines for claiming the new residential rental property rebate.

Rebate for sale of building and lease of land

When a builder sells new or substantially renovated housing and, under the same agreement, leases the related land to the purchaser for use as a place of residence by individuals, the builder is considered to make a self-supply of the housing and land and is required to account for the GST/HST on the self-supply. As a result, the GST/HST is generally embedded in the price paid by the purchaser for the new house together with the leased land.

Where a builder's self-supply was subject to the HST, the B.C. new residential rental property rebate may enable a builder to recover a portion of the provincial part of the HST deemed to be paid on the self-supply.

In this case, the existing B.C. new residential rental property rebate is equal to 71.43% of the 7% provincial part of the HST that a builder is deemed to have paid under the self-supply rules and that is attributable to a qualifying residential unit, minus any B.C. new housing rebate that the purchaser is entitled to claim.

The current maximum B.C. new residential rental property rebate for a qualifying residential unit is $26,250.

For multiple-unit rental housing (i.e., generally, housing with more than two residential units), the maximum rebate of $26,250 applies for each qualifying residential unit.

As proposed, the maximum B.C. new residential rental property rebate that could be claimed by a builder under these circumstances for a qualifying residential unit would be increased to $42,500 where the HST on the builder's self-supply becomes payable on or after April 1, 2012 and before April 1, 2013, and the builder qualifies for the existing B.C. new housing rebate.

For multiple-unit rental housing (i.e., generally, housing with more than two residential units), the maximum rebate of $42,500 would apply for each qualifying residential unit.

As there would be no phase out of this rebate, a qualifying residential unit priced above $952,000 (i.e., $850,000 plus 12% embedded HST) could qualify for the maximum rebate amount of $42,500.

Rebate for lease of land

The existing B.C. new residential rental property rebate may be available for a person who makes an exempt rental of land for residential use (i.e., rents out a residential lot, a site in a residential trailer park or a site in an addition to a residential trailer park) and, as a result, is considered to have paid the HST under the self-supply rules.

See Guide RC4231, GST/HST New Residential Rental Property Rebate for details regarding the conditions and deadline for claiming the new residential rental property rebate for leased land.

The existing B.C. new residential rental property rebate for qualifying leased land is 71.43% of the provincial part of the HST paid under the self-supply rules, to a maximum of $8,663 (i.e., 33% of $26,250).

For qualifying multiple residential lots or sites in a residential trailer park or additions thereto, the maximum rebate amount of $8,663 applies to each lot or site.

As proposed, the maximum B.C. new residential rebate that may be claimed for qualifying leased land would be increased to $14,025 (i.e., 33% of $42,500) where the HST is considered to be paid by the person under the self-supply rules on or after April 1, 2012 and before April 1, 2013 and the person qualifies for the existing B.C. new residential rental property rebate.

For qualifying multiple residential lots or sites in a residential trailer park or additions thereto, the maximum rebate of $14,025 would apply to each lot or site.

Claiming the enhanced new residential rental property rebate

The enhanced B.C. new residential rental property rebate would be administered by the CRA.

As before, the GST/HST new residential rental property rebate application must be filed directly with the CRA. Revised application forms are available on the CRA Web site.

Filing deadlines vary, depending on the type of application being made for the new residential rental property rebate. The time limits for claiming the existing B.C. new residential rental property rebates would continue to apply for the enhanced new housing rebates. Refer to Guide RC4231, GST/HST New Residential Rental Property Rebate, for the applicable due date for your particular application type.

Public service bodies

Where a public service body is a landlord and is entitled to claim the B.C. public service body rebate in respect of the provincial part of the HST paid or payable on the purchase or self-supply of its residential rental property, the public service body would be entitled to claim either the B.C. public service body rebate or the enhanced B.C. new residential rental property rebate.

All technical publications related to GST/HST are available on the CRA Web site at www.cra.gc.ca/gsthsttech.

Date modified:

2012-09-06