The vast majority of real estate developers in Ontario
include the HST rebate in the sale price of new condo when they release their
new developments for sale to the general public. In the many pages of the legal
document known as the Agreement of Purchase and Sale that the purchaser must
sign, one of the terms outlined is a statement of confirmation that the purchaser
will move into the new condo as their primary residence. In this case, the right to claim the HST
rebate has been assigned from the purchaser to the builder. Essentially, the owner-occupier purchaser has
no responsibility for the portion of HST due on closing for the new condo as it
will be used as a primary residence.
What happens in the case that I decide to not move into my
new condo investment?
Note that condo investors wrongfully claiming their new
condos as their primary residence are being audited these days. CRA estimates that about 70% of new build
primary residence claims are false. They
have recently embarked on a new mission to audit for HST rebates but also for
capital gains (sometimes demanding tax be paid as investment income instead of
a capital gain). This past April, a CRA
spokesperson reported to the Toronto Star that CRA is focusing on real estate as
there is much unclaimed return on investment and HST fraud as a result of the
condo boom. What is our advice? Plan your real estate investments ahead of
time. Understand the HST rules and
regulations and stay off CRA’s delinquent list.
Call HST Relief: Rebates and Loans for a free consultation
to help you understand these rules and regulations. We offer 2 services that aim to support condo
investors:
- We provide loans for HST so that you aren’t
tempted to wrongfully claim a new condo as your primary residence. You don’t want to be flagged and audited by
CRA.
- We provide the service of filing your HST Rebate
to ensure that you reclaim the HST you paid on closing for your new investment
property
There are several considerations that affect your
eligibility in reclaiming the HST through CRA’s New Residential Rental Rebate
Program. Make sure you understand the
rules before closing. Some of the issues
to watch out for are:
- When your condo will be occupied (during
occupancy period or after closing)
- Who will occupy your condo – not all blood
relatives may occupy your new condo as a primary residence without HST
implications
- Whether or not all people on title will occupy
the unit as their primary residence
- Whether or not you purchased your condo on
assignment before closing
- When you plan to sell the condo as CRA reserves
the right to claw back the HST Rebate that was issued to you
Call us for specific advice that pertains to your particular
condo purchasing scenario. It should be
noted that these same principles apply to purchasing new build houses,
townhomes, duplexes and condos all across Ontario.
For more online reading, check out our clients’
FAQs with our team’s detailed answers posted
here.