Real Estate

HST Payment and Rebate on Investment property

  • Last Updated:
  • Nov 23rd, 2023 12:26 pm
Jr. Member
Jan 19, 2018
114 posts
50 upvotes

HST Payment and Rebate on Investment property

We have booked a rental property which will be closing in next few months.

The total house price is $676,000.
My question is that at time of closing, how much HST i will have to pay.

Is it 13% of 676,000 ?

How does the NRRP rebate works and how much of this HST payment we can get back with 1 year lease agreement.

Just trying to determine the amount of funds needed at closing.

Thanks..
14 replies
Member
Dec 1, 2019
208 posts
240 upvotes
Kanata
Assuming this is a purchase in Ontario, the price on your APS should be inclusive of HST - net of rebate. Meaning a majority of the 13% of the HST is already included in your price.

Therefore, the additional HST due on closing shouldn't be higher than $24K, but will be a calculation done by the builder's finance team or their lawyers. This is assuming you've stated to the builder that your intent for the property is to be an investment.

Once you close and successfully rent out the property (with a minimum 1-year lease signed), you can send a copy of the lease, with a copy of your final Statement of Adjustments (to prove you paid the additional HST as an investment) and completed CRA paperwork to CRA who will review and should send you back the rebate within 4-6 weeks (estimated). That rebate amount should be the extra HST that you had to pay on closing to begin with.

Hope that helps.
Deal Addict
Mar 22, 2010
4125 posts
2165 upvotes
Salute wrote: We have booked a rental property which will be closing in next few months.

The total house price is $676,000.
My question is that at time of closing, how much HST i will have to pay.

Is it 13% of 676,000 ?

How does the NRRP rebate works and how much of this HST payment we can get back with 1 year lease agreement.

Just trying to determine the amount of funds needed at closing.

Thanks..
whoa... where is your agent on this?
Sr. Member
Dec 19, 2010
907 posts
348 upvotes
Toronto, Ontario
rapashoo wrote: whoa... where is your agent on this?
assuming he bought pre-construction, there is likely no agent involved.
Deal Addict
Mar 22, 2010
4125 posts
2165 upvotes
jamieee wrote: assuming he bought pre-construction, there is likely no agent involved.
But then there is a lawyer who would normally assist on this. What I am getting at is OP seems to be very new to this and he must be given solid information.
Deal Addict
Nov 22, 2004
1621 posts
765 upvotes
GTA
Salute wrote: We have booked a rental property which will be closing in next few months.

The total house price is $676,000.
My question is that at time of closing, how much HST i will have to pay.

Is it 13% of 676,000 ?

How does the NRRP rebate works and how much of this HST payment we can get back with 1 year lease agreement.

Just trying to determine the amount of funds needed at closing.

Thanks..
DiscountDunk is correct. The links below should help you with the exercise but you're looking at $24k in HST payments:


As for estimating closing costs, you'll have land transfer tax, development charges/school/park levies, HST, tarion enrolment, utility meters, property tax (if not covered by the builder), lawyer fees. Add about $3k~$4k buffer for additional fees for small amounts that add up, but I believe I've covered the big ticket items.

All the best
CPA. Realtor.
Jr. Member
Jan 19, 2018
114 posts
50 upvotes
Thanks a ton, this is exactly what i was looking for.
Was just trying to budget, how much money i will need at time of closing..
I
Jr. Member
Nov 25, 2016
193 posts
169 upvotes
It should be included in the price, ask your agent to confirm.
Jr. Member
Jul 24, 2018
105 posts
95 upvotes
Salute wrote: Thanks a ton, this is exactly what i was looking for.
Was just trying to budget, how much money i will need at time of closing..
I
You get correct to the point info above.

Few points. 24k approx you will pay at closing. (Not interm closing). You can rent during interm closing assuming builder allowed it.
Cra paperwork filled, safely assume 1 year wait to get back 23500
Member
Dec 1, 2019
208 posts
240 upvotes
Kanata
GCSingh wrote: You get correct to the point info above.

Few points. 24k approx you will pay at closing. (Not interm closing). You can rent during interm closing assuming builder allowed it.
Cra paperwork filled, safely assume 1 year wait to get back 23500
Some builders (in Ottawa at least) will collect the additional HST on interim closing - often times in order to allow you to rent out the property during that interim period. Best to have your lawyer inquire if your builder will for sure collect it a Final closing or perhaps at Interim. Assuming this is for a high-rise condo and you've already provided 20% deposit to the builder, then no further deposit will probably be collected at Interim closing - however, if it's not a high-rise condo and/or you have not provided 20% in deposit to date to the builder, then they might also expect a top up to that % to be collected upon Interim closing as well.
Jr. Member
Nov 15, 2019
116 posts
50 upvotes
Assuming this is a typical agreement of purchase and sale in Ontario, you will pay $24k on final closing, and then apply for the $24k rebate from CRA.

I am a tax lawyer, and I assist clients applying for HST rebates, including clients who are facing audits, etc. Here's a blog post I wrote on HST rebates: https://trevorklaw.com/gst-hst-rebates- ... purchases/
Newbie
May 27, 2022
4 posts
I've just sold my condo (primary residence), and bought another condo, closing shortly, this new property is an assignment sale, closing with the builder is due in a month.

In the near future I'm planning to move out of Canada (in 2-4 months) and will be putting this unit for rent, I'm considering renting it out from day 1 (unit is currently in occupancy phase) while I stay in a short term rental. Since it's a new unit, my real-estate lawyer told me if I'm declaring it as a rental/investment property during the purchase I'll have to pay $24k in HST (since this is the rebate builder obtained and is not added to the original purchase price)

I've obtained Mortgage approval from CIBC citing this as my primary residence (for now) and shared with the builder for review (one of the conditions on the offer).

I'm putting 20% down on the purchase price, and going with CIBC for the mortgage since I get to clawback the penalty amount (of breaking the mortgage on my sold property). CIBC is offering me a 3 year fixed at 6.14%.

Could you please help share my options towards saving HST, and being eligible for rental income mortgage interest deductions etc.
Newbie
May 6, 2019
55 posts
118 upvotes
Hoping for some advice here:

I recently closed my second property bought directly from builder and had stated it as primary residence at time of closing.

However, due to personal emergency we wont be moving to new property and will continue to live at current primary residence.

We now want to lease the second property in order to cover mortgage and will be informing the builder.

As per lawyer we will have to pay 24k HST which we will pay but he isn’t sure if we as purchaser will be eligible to claim it back as rebate from CRA once the property is leased for 1 year.

Please advice if you have experience regarding this situation specifically a case where property type is changed from primary to rental within few weeks of AFTER closing and it is second property.

Thanks in advance
Last edited by Jaip22 on Nov 23rd, 2023 9:04 am, edited 1 time in total.
Deal Addict
Feb 19, 2019
2300 posts
3926 upvotes
Stouffville ON
Jaip22 wrote: Hoping for some advice here:

I recently closed my second property bought directly from builder and had stated it as primary residence at time of closing.

However, due to personal emergency we wont be moving to new property and will continue to live at current primary residence.

We now want to lease the second property in order to cover mortgage and will be informing the builder.

As per lawyer we will have to pay 24k HST which we will pay but he isn’t sure if we as purchaser will be eligible to claim it back as rebate from CRA once the property is leased for 1 year.

Please advice if you have experience regarding this situation specifically a case where property type is changed from primary to rental within few weeks of closing and it is second property.

Thanks in advance
If you meet the criteria you will apply for hst rebate on rental property and get the money in few months, it's common and straight forward. Your initial intent on this being a principal residence is irrelevant in this case.
https://www.canada.ca/en/revenue-agency ... ebate.html
Full Time and Full Service Realtor
Jr. Member
Nov 15, 2019
116 posts
50 upvotes
Jaip22 wrote: Hoping for some advice here:

I recently closed my second property bought directly from builder and had stated it as primary residence at time of closing.

However, due to personal emergency we wont be moving to new property and will continue to live at current primary residence.

We now want to lease the second property in order to cover mortgage and will be informing the builder.

As per lawyer we will have to pay 24k HST which we will pay but he isn’t sure if we as purchaser will be eligible to claim it back as rebate from CRA once the property is leased for 1 year.

Please advice if you have experience regarding this situation specifically a case where property type is changed from primary to rental within few weeks of AFTER closing and it is second property.

Thanks in advance
It sounds like you may be able to qualify for the HST rental rebate. I practice tax law, and prepare HST rebate applications on behalf of clients. I'd be happy to assist in your situation. Thank you.

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