RC4231 "GST/HST New Residential Rental Property Rebate” October 2016

Determination of unit FMV

For qualifying residential units that are located in a newly constructed multiple unit residential complex, the percentage of floor space of a qualifying residential unit in comparison to the total floor space for all of the residential units will be multiplied by the FMV of the residential complex to determine the FMV of the unit.

Exclusion for purchasers under purchase agreement

Generally, you are a builder of a residential complex, or an addition to a multiple unit residential complex, if you:

• build or substantially renovate the complex or you build the addition, on land you own or have acquired by way of lease, or you hire someone else to build or substantially renovate the complex, or to build the addition, on land you own or have acquired by way of lease. However, you are not a builder if your only interest in the land is a right to purchase the housing or an interest in the housing from a builder;
• acquire an interest in the housing when it is already under construction or substantial renovation, or when the addition is under construction, except where the interest is only a right to purchase the housing or an interest in the housing from a builder;
• acquire an interest in the housing before anyone has lived in it and your primary purpose in acquiring the interest is to either sell the house, sell the interest, or to lease the house to a person who will not use the house for their own personal use (for example, you lease the house to another landlord); or
• acquire an interest in a residential condominium unit either before the complex is registered as a condominium or before anyone has lived in it, and your primary purpose in acquiring the interest is to either sell the unit, sell the interest, or to lease the unit to a person, such as a landlord, who will not use the unit for their own personal use.

Exception for individual not in business/adventure

You are not a builder if you are an individual whose activities are described by any one of the previous conditions and those activities are not carried out in the course of a business or an adventure in the nature of trade.

Meaning of having "possession" as purchaser

Possession - for GST/HST purposes, generally means that you hold, control, or occupy the property. For example, if you pay the property taxes, have the right to alter the land, control entry or access to the property, or pay insurance coverage, you may be considered to have possession of the property.

Timing of tax payable on condo purchase

If you purchase a qualifying residential unit that is a residential condominium unit where possession of the unit is transferred to you before the complex is registered as a condominium, the tax is payable (and you have to determine the FMV of the condominium) on the day that is the earliest of the following dates:

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

Example: interim occupant and purchaser of condo

James enters into an agreement to purchase a residential condominium unit in September 2013 for $300,000. He does not take possession until May 1, 2016. The complex is not registered as a condominium until July 1, 2016, and the deed of ownership is transferred to James on August 1, 2016. Since tax is payable on the earlier of the day ownership is transferred (August 1, 2016) and 60 days after the complex is registered as a condominium (August 29, 2016), August 1, 2016, is the day that tax is payable.

Example: closing by condo purchaser while tenant of purchser leasing it

Claire enters into an agreement to purchase a residential condominium unit on September 15, 2014. Claire takes possession of the unit and her tenant occupied the unit on March 1, 2016. The complex is registered as a condominium on May 1, 2016. The deed of ownership is transferred to Claire on June 1, 2016. Since tax is payable on the earlier of the day ownership is transferred (June 1, 2016) and 60 days after the complex is registered as a condominium (June 30, 2016), June 1, 2016, is the day that tax is payable. Claire enters June 1, 2016, in Section B [of GST524].

Summary of (a)(ii) test

Do you hold the unit for any one of the following purposes? To make an exempt lease or sublease of the unit for use by an individual as a place of residence (including an exempt lease or sublease of the unit that you make to another person if that person holds the unit to make an exempt sublease of the unit for use by an individual as a place of residence). To make an exempt supply of property or a service that includes giving possession or use of the unit under a lease, licence or similar arrangement entered into for the purpose of the unit's occupancy by an individual as a place of residence. To make an exempt sale of the unit and an exempt lease of the related land under a single written agreement. To occupy the unit as your primary place of residence where another unit situated in the same complex is a qualifying residential unit that you hold for one of the purposes listed above.