3 November 1995 Interpretation 950229 – Sale of Rebuilt Cottage – ITCs on Costs Incurred for Rebuilding the Cottage
The subject cottage, that was rented out as a principal place of residence (ie., a residential complex) was subject to a fire in early 1995 that almost destroyed it. After the fire it was decided the cottage would be rebuilt. The owners main intention is to sell the rebuilt cottage. CRA commented:
The owner of the subject cottage appears to have been in the course of a business of making supplies of real property (e.g., residential landlord of the subject cottage). Therefore, if the owner determines that the renovations of the subject cottage are not substantial renovations the owner shall be deemed to have paid as recipient and to have collected as a supplier, GST in respect of the cottage provided for in section 192. The owner would not be eligible for any ITCs in this scenario.