Real Estate

HST on commercial properties question

  • Last Updated:
  • Feb 16th, 2019 11:09 am
[OP]
Sr. Member
Aug 18, 2014
602 posts
374 upvotes
Markham, ON

HST on commercial properties question

How does the HST for commercial property work..? Normally when you buy a residential property there is no HST or sales tax...but supposedly HST is charged on commercial property.
However our lawyer said we don't have to pay HST during the transaction if we have an HST number or register a new one (Something you can easily do <1hour online)

But then we are supposed to "self-assessed" the property value...and pay HST on the purchase price..??
This is a bit confusing since running our other other business, HST is never an actual cost or income.... Normally we receive an input tax credit for all the HST paid out and remit all HST collected from our revenue.

So let's say we bought a unit for $500K. Do we need to self assess an HST of 13%x500K=$65K? Do we actually need to pay this amount out of pocket? Or I can simply claim an input tax credit of $65K for HST paid/due??

This just seems confusing to me...
In the end...is there an actual out of pocket HST cost when you buy commercial property?
3 replies
Deal Fanatic
Jul 3, 2011
5328 posts
2404 upvotes
Thornhill
The Customs and Excise rules on HST actually do state that where the purchaser is an HST registrant, they are supposed to self-assess and remit the HST on the sale less the ITC to Canada Revenue.
[OP]
Sr. Member
Aug 18, 2014
602 posts
374 upvotes
Markham, ON
licenced wrote:
Feb 15th, 2019 6:15 pm
The Customs and Excise rules on HST actually do state that where the purchaser is an HST registrant, they are supposed to self-assess and remit the HST on the sale less the ITC to Canada Revenue.
Sorry, that's still quite confusing..

So can you claim an ITC for the self-assessed HST on the property? (I mean if you can claim ITC on the self-assessed hst, the actual tax due will always be $0 anyway, so what is there to remit?)

Bottom line...is there hst due/cost when you buy a commercial properties?
Deal Fanatic
Jul 3, 2011
5328 posts
2404 upvotes
Thornhill
pinkdonut wrote:
Feb 16th, 2019 10:19 am
Sorry, that's still quite confusing..

So can you claim an ITC for the self-assessed HST on the property? (I mean if you can claim ITC on the self-assessed hst, the actual tax due will always be $0 anyway, so what is there to remit?)

Bottom line...is there hst due/cost when you buy a commercial properties?
Bottom line, yes there is. And you are correct the ITC would bring it to zero.

Maybe this will help you to better understand the requirement...

https://www.mnp.ca/en/posts/real-proper ... to-be-true

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