Can I Claim the HST Rebate on a Rental House I Built Myself in Ontario?
Whether you can claim an HST rebate on a rental house you built or substantially renovated yourself depends on how the property will be used, when it is first occupied and the details of the build. There is no single answer for every owner-builder, and the conditions are specific.
How the HST rebate and self-supply rules apply to you depends on the facts of your build. Because a mistake can be costly, confirm with an accountant whether you qualify, what to report and when, before you start renting the property.
Some related points are worth knowing. Adding a second unit in a house requires a building permit from the local building department, and the electrical work needs a separate permit and an inspection by the Electrical Safety Authority (ESA). Whether a rental unit needs a licence or registration depends on the local municipality's own by-law. Later, when you sell, your adjusted cost base is usually the cost of the property plus the costs of buying it, and any capital cost allowance you claimed above the undepreciated balance is recaptured and added to income in full. Keep your invoices and permits organized from day one.
Key takeaways
- Whether a rebate or self-supply rules apply depends on how the property is used, when it is first occupied and how it was built.
- How this applies depends on your situation, so it is worth confirming with an accountant or lawyer before you file.
- Adding a second unit in a house requires a building permit, and the electrical work needs a separate permit and ESA inspection.
- Keep every invoice, because costs feed into your cost base, and CCA claimed above the undepreciated balance left in the class when you sell is recaptured and added to income in full.