Buying a New Home Through a Numbered Company: GST/HST Rebate in Canada

Buying a new home or condo through a numbered company is common for tax, liability or investment reasons. What many buyers do not realize is that the federal GST/HST new housing rebate is built for individuals who will live in the home. Putting a corporation on the agreement can close the door on it.

This article explains in general terms what the rule says, what relief a corporation may still have if it rents the unit out, and what to settle before you sign. A lawyer or accountant can confirm how it applies to your plan.

This article covers Canadian federal tax law, which applies in every province.

Why a corporation cannot claim the new housing rebate

Only individuals can claim the new housing rebate. Partnerships and corporations cannot, and an individual cannot claim if a partnership or corporation co-owns the house. A numbered company is a corporation, so it is not eligible on its own.

The rebate also depends on the home being used as the primary place of residence of the buyer or a relation, with that intent evident at the outset. A recreational cottage, an investment property, or a house you plan to use on a more distant occasion such as retirement does not qualify.

Relief for a corporation that rents the unit out

A corporation is not shut out of all relief. A corporation that is not a co-op and is the purchaser and landlord can claim the new residential rental property rebate on Form GST524 (Type 6) if the purchase was taxable and it is not the builder.

• The property must include a qualifying residential unit that is self-contained, held for exempt residential rental, and first used as a primary residence for at least one year.
• The tax must not be recoverable as an input tax credit.
• The amount is A × ($450,000 − B) ÷ $100,000, where A is the lesser of $6,300 and 36% of the tax (times the unit's floor-space share in multi-unit complexes), and B is the greater of $350,000 and the unit's fair market value.
• You apply on Form GST524 within two years after the end of the month tax first became payable.

This rebate uses fair market value, not the contract price, and it is for units leased or held for lease as residences. It is not paid where an individual qualifies for the new housing rebate on the same housing.

Limits and repayment risks on the rental rebate

The rental rebate is not paid for purchases of existing occupied rentals where no GST/HST was payable, for units that are not self-contained or not held for exempt residential leases, where tax is recoverable under another law, or to public service bodies eligible for the federal-part rebate.

If a non-multi-unit qualifying unit is sold within one year of first occupancy to a buyer who will not use it as a primary residence, the rebate must be repaid with interest at the prescribed rate less 2% per year. A separate purpose-built rental housing rebate is a 100% federal-part rebate with no fair-market-value phase-out, but it excludes condos, single units, duplexes and triplexes, and it cannot be claimed together with the rental rebate on the same property.

Buying in your own name instead

If the home is meant to be lived in, buying in an individual's name may keep the rebate available. The house can be the primary residence of the buyer or a relation, so a parent may qualify when buying for an adult child who will live there, if all other conditions are met and the first occupant is the buyer or a relation. Relations include blood relatives, spouses, common-law partners and adoptive relations, and for this rebate former spouses and former common-law partners also count.

The first-time home buyer rebate also looks to the individual: it asks about the buyer's age, citizenship or residency, past home ownership, and whether the buyer must be first occupant. Whether a given corporate structure can fit any of this depends on the facts, so get advice first.

What to do next

• Decide whether the home is for you or a relation to live in, or for rent.
• Ask who should be named on the agreement before you sign, since the name affects eligibility.
• If a corporation will own it, confirm the purchase is taxable and note the Form GST524 two-year window.
• Ask whether the unit will meet the self-contained, held-for-rent requirements.
• Keep the statement of adjustments and invoices, and speak to a lawyer or accountant about your structure.

Frequently asked questions