Real Estate

Ottawa and Surrounding Area Real Estate market discussion

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Sr. Member
May 6, 2012
863 posts
649 upvotes
KANATA
jk9088 wrote: The builder always advertises prices with the HST rebate included. However, often you'll see fine print indicating that this is only if it will be your principal residence. The onus is on you to let the builder know you will be renting it out, not living in it. Sometimes the builder will ask you when you sign the purchase agreement. Otherwise, your lawyer definitely will be clarifying this with you before closing to make sure you are paying the HST if necessary.

Here are some links btw if you are curious, it's called the NRRP (new residential rental property) rebate:

https://www.canada.ca/en/revenue-agency ... ebate.html

(That page provides further links that are useful.)

Also note the following, although I believe your new build is higher than 450k anyways:

"To be eligible for the NRRP rebate, the fair market value on the qualifying residential unit must be less than $450,000 when the tax was payable on the purchase."

This means if you bought the house at a price of 400k but a year later has appreciated to 500k when you close, you unfortunately are no longer eligible for the federal rebate. However, you can still get some of the money back via the Ontario rebate.
Woow, this is new to me. Thanks a lot. I thought I can get full HST rebate by providing one year lease
Deal Addict
May 18, 2015
1803 posts
851 upvotes
Ottawa,Ont
shaneLM wrote: If someone has paid off their mortgage completely but wants to access the equity from their property for an international home purchase, could they do they take out a mortgage instead of a HELOC?
yes
Deal Addict
May 23, 2017
1358 posts
1343 upvotes
welcomelm wrote: Woow, this is new to me. Thanks a lot. I thought I can get full HST rebate by providing one year lease
No problem, I think it is a common misconception and I was not aware of it either until I looked into it. I think a lot of us might actually be in this situation soon (bought a house over a year ago <450k but now thanks to the crazy appreciation it is now valued >450k and we will be getting less rebate back than expected). Fortunately it is not a huge amount, for example I calculated it for my property and I expect I will lose out on about $5k of rebate (only get $22k back instead of $27k, which is annoying but at least manageable...hopefully my calculation is correct, I'll have to verify with my lawyer when I close later this year).
Deal Guru
User avatar
Jun 28, 2003
12184 posts
5651 upvotes
Ottawa
welcomelm wrote: Maybe tenants don't like the house in Barhaven, be it either it is too old, too small or doesn't go with their taste. Anything can happen. Or it is possible that the tenants move from out of town and they don't have social circle in Ottawa anyway. I am not saying tenant must take one rental over the other, but in real life, there is definitely something to play with.

Last year, I was talking to a buyer in CP. He worked in Westboro, lived in Barhaven. He wanted to sell his Barhaven property and moved to cheaper CP. Now I think almost all of us would disagree with this kind of decision, but it happened around us.
If you believe you can get solid tenants paying the price you want for Carleton Place (I believe you mentioned you can get $2K+ rent for a 3-bedroom townhouse in Carleton Place in previous posts), you may as well hang on to the property for a number of years and let it appreciate even more, rather than trying to flip after taking possession for only 1 year and possibly not getting the profits you had in mind, with HST rebate and potential CRA questions hanging in the air.
Sr. Member
May 6, 2012
863 posts
649 upvotes
KANATA
canabiz wrote: If you believe you can get solid tenants paying the price you want for Carleton Place (I believe you mentioned you can get $2K+ rent for a 3-bedroom townhouse in Carleton Place in previous posts), you may as well hang on to the property for a number of years and let it appreciate even more, rather than trying to flip after taking possession for only 1 year and possibly not getting the profits you had in mind, with HST rebate and potential CRA questions hanging in the air.
That would ideal. Anyways, we will know in about 6 months.
BTW, I didn't say I can get 2000+ rent in CP. On the contrary, I am getting myself ready for this what you called "dog eat dog" fight in the near future Smiling Face With Open Mouth And Smiling Eyes
Last edited by welcomelm on Feb 20th, 2021 1:59 pm, edited 1 time in total.
Sr. Member
May 6, 2012
863 posts
649 upvotes
KANATA
jk9088 wrote: No problem, I think it is a common misconception and I was not aware of it either until I looked into it. I think a lot of us might actually be in this situation soon (bought a house over a year ago <450k but now thanks to the crazy appreciation it is now valued >450k and we will be getting less rebate back than expected). Fortunately it is not a huge amount, for example I calculated it for my property and I expect I will lose out on about $5k of rebate (only get $22k back instead of $27k, which is annoying but at least manageable...hopefully my calculation is correct, I'll have to verify with my lawyer when I close later this year).
How do you come up with these numbers?
Deal Addict
May 23, 2017
1358 posts
1343 upvotes
welcomelm wrote: How do you come up with these numbers?
I just googled NRRP rebate calculator...I don't want to link one in case it is inaccurate but there are lots out there.

Usually they show you the breakdown between the federal portion vs. provincial portion. So for example when I entered my purchase price it showed a federal portion of 5k and provincial portion 22k, but because the fair market value is now higher than 450k I don't expect to get the 5k federal part back.

I did also do the calculation for the provincial portion myself to get the same numbers: (purchase price - built-in HST rebate) * 0.08 * 0.75

(See form here: https://www.canada.ca/en/revenue-agency ... 24-on.html)
Sr. Member
Jul 15, 2019
724 posts
588 upvotes
jk9088 wrote: No problem, I think it is a common misconception and I was not aware of it either until I looked into it. I think a lot of us might actually be in this situation soon (bought a house over a year ago <450k but now thanks to the crazy appreciation it is now valued >450k and we will be getting less rebate back than expected). Fortunately it is not a huge amount, for example I calculated it for my property and I expect I will lose out on about $5k of rebate (only get $22k back instead of $27k, which is annoying but at least manageable...hopefully my calculation is correct, I'll have to verify with my lawyer when I close later this year).
Wait why would the rebate be based on the appraised amount and not the purchase price? The hst is being charged on your transaction price, and shouldn’t be affected by appreciation.

That’s actually awful they are doing it that way, if that’s the cAse.

Can you link me to the exert with that info?
Deal Addict
May 23, 2017
1358 posts
1343 upvotes
freeman93 wrote: Wait why would the rebate be based on the appraised amount and not the purchase price? The hst is being charged on your transaction price, and shouldn’t be affected by appreciation.

That’s actually awful they are doing it that way, if that’s the cAse.

Can you link me to the exert with that info?
Please see my previous post:
jk9088 wrote: https://www.canada.ca/en/revenue-agency ... ebate.html

"To be eligible for the NRRP rebate, the fair market value on the qualifying residential unit must be less than $450,000 when the tax was payable on the purchase."

This means if you bought the house at a price of 400k but a year later has appreciated to 500k when you close, you unfortunately are no longer eligible for the federal rebate. However, you can still get some of the money back via the Ontario rebate.
Here is also an RFD thread on the issue (not much info though): new-residential-rental-property-rebate-2356126/
Deal Addict
Dec 19, 2009
1955 posts
2985 upvotes
Ottawa
jk9088 wrote: I just meant that because you will be paying interest on the money immediately, it is in your best interest not to have the money lying around.

E.g. if you pull out 100k cash through a refinance, of course you don't have to use it and can just keep it sitting around. But that kind of defeats the purpose if you don't have a use in mind for it since you will be paying interest on it from day one.

Whereas for a HELOC, you can set it up for 100k but don't have to actually borrow the money (and pay interest) until you actually have use for the money.

In your case, if you know you will be using the money shortly then of course it's fine, but if you don't have a concrete goal in mind, I would wait a bit to refinance and finalize your other plans otherwise you are just paying interest for a long time for nothing.

In addition, be careful with CRA. In order for your refinance to be tax-deductible, you must be able to prove that you have used the borrowed funds for investment. If you just have funds sitting around not being used you cannot claim the interest as tax-deductible during that time.

Which brings me to your bolded point...if you use the money to pay down your principal residence it will not be tax-deductible. I don't know your specific situation so perhaps you have reasons for doing this, perhaps it will still save you some interest, but bear in mind you will not be converting non-tax-deductible debt to tax-deductible debt (if that was your goal). And if you are using half the refinance funds for principal residence paydown plus half the funds for investment at an undetermined future time, make sure your accounting is on point so you can show CRA that you are linking the purpose of the funds clearly for any part that is tax-deductible.
Thanks for clarifying.

I’m probably making this more complicated than it needs to be...are you saying that if I pull equity for non investment purposes then I can’t deduct that added interest from my rental income at tax time? I.e. my mortgage owing on my rental goes from $200k to $300k after refinance...but CRA will only allow me to deduct mortgage interest on $200k amount as opposed to the actual $300k amount after refinance?

The way I look at it is regardless of what I do with the equity I pull...I might as well have easy access to the funds rather than cash flowing too much and owing more taxes because of increased rental profit every year. But I suppose your point (and others) is if I don’t have a specific purpose for the pulled equity then just use a HELOC as needed so I’m not paying interest on the entire $100k from the time I refinance.

I’ll end up talking with my accountant but just trying to wrap my head around things a little more before doing so.
Deal Addict
May 23, 2017
1358 posts
1343 upvotes
mikek33 wrote: I’m probably making this more complicated than it needs to be...are you saying that if I pull equity for non investment purposes then I can’t deduct that added interest from my rental income at tax time? I.e. my mortgage owing on my rental goes from $200k to $300k after refinance...but CRA will only allow me to deduct mortgage interest on $200k amount as opposed to the actual $300k amount after refinance?
Yes exactly, I will quote another of my older posts with more details:
jk9088 wrote: fogetmylogin is correct and posted some great info but I just wanted to add the CRA link as you requested, especially since this is an issue I see come up a lot by RE investors: (again, important thing to keep in mind as fogetmylogin stated is that the key is you can only borrow money for the direct purposes of investing i.e. generating income...therefore borrowing funds from a property to buy a rental is totally ok to tax deduct but borrowing equity to buy a principal residence is not)

https://www.canada.ca/en/revenue-agency ... ility.html

Key points from that:

"Where money is borrowed, the use of the money must be established and the purpose of that use must be to earn income."

"In determining what borrowed money has been used for, the onus is on a taxpayer to trace or link the borrowed money to a specific eligible use, giving effect to the existing legal relationships."
Definitely talk to your accountant before proceeding with anything.
Deal Addict
May 23, 2017
1358 posts
1343 upvotes
freeman93 wrote: Thanks, let’s me know lots more money coming closing time for me lol
I thought you purchased a principal residence? This only matters for rentals where you are applying for the rebate after closing. For principal residence nothing to worry about you will pay what was agreed on in your purchase agreement with the builder.
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Jun 28, 2003
12184 posts
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Ottawa
welcomelm wrote: That would ideal. Anyways, we will know in about 6 months.
BTW, I didn't say I can get 2000+ rent in CP. On the contrary, I am getting myself ready for this what you called "dog eat dog" fight in the near future Smiling Face With Open Mouth And Smiling Eyes
I remember you were ready to call other landlords a *b!tch* if they dare lowering their prices to $1,900/month so they can find tenants for CP lol.

C'mon man, I wasn't born yesterday bruh ;)
Deal Addict
Nov 26, 2004
4462 posts
4129 upvotes
mikek33 wrote: The way I look at it is regardless of what I do with the equity I pull...I might as well have easy access to the funds rather than cash flowing too much and owing more taxes because of increased rental profit every year. But I suppose your point (and others) is if I don’t have a specific purpose for the pulled equity then just use a HELOC as needed so I’m not paying interest on the entire $100k from the time I refinance.
If you were to park the excess fund into a HISA, than the interest will become tax deductible.

Though 2 months later, if you use the $80k of those fund to buy a vacation condo, then, the interest associated with that $80k will be non deductible. But if you rent out the vacation condo for part of the year, than that amount will become deductible again.Grinning Face
Sr. Member
May 6, 2012
863 posts
649 upvotes
KANATA
canabiz wrote: I remember you were ready to call other landlords a *b!tch* if they dare lowering their prices to $1,900/month so they can find tenants for CP lol.

C'mon man, I wasn't born yesterday bruh ;)
Haha, all joke aside. Things might not be that bad this year. Weeks ago, I got scared when I searched over MLS and found 40 rental ads over Kanata south/Stittsville. But today I searched again and found the number of rentals are greatly reduced over that area. So maybe it is true that although rental supplies will surge in the next few months, so is demand. Of course Ottawa dogs always eat main dish and whatever leftover belongs to our exurb dogs :twisted:
Deal Addict
Nov 6, 2007
1940 posts
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Anonymos402 wrote: South Kanata Townhome, Purple bricks listing.
Mattamy build (82 foot depth) fetched 750K

https://www.redfin.ca/on/ottawa/442-Mea ... /151375691
Nuts. Meadowbreeze Dr a pretty busy street too. Lots of traffic and cars. Also bus stop.

This is a Glenview. Their biggest end unit model. 4 bedroom and 2,254 Sqf (including basement obviously)

https://www.glenviewhomes.com/communiti ... illow-end/

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