- A landlord who bought a newly built or substantially renovated rental property may recover part of the GST or the federal part of the HST through the New Residential Rental Property (NRRP) rebate.
- The federal rebate is not available for a unit with a fair market value of $450,000 or more, but the Ontario rebate can still apply.
- The unit must first be used as a primary place of residence for at least one year, or an equivalent period for certain other arrangements, and a purchaser-landlord must apply within two years after the end of the month in which tax first becomes payable on the purchase.
You have gutted a rental building and rebuilt the inside, and you paid GST/HST on the work. Now you are wondering whether some of that tax can come back to you. In many cases a rebate exists, but it depends on how the property is used and what it is worth.
This article explains the main rebates that apply to rental property in Ontario, the conditions that commonly trip owners up, and what to gather before you file. Whether your renovation counts as substantial is a question of fact, so it is worth confirming with an accountant or lawyer.
Why the rebate matters to a landlord
Long-term rentals of residential accommodation, meaning rentals of one month or more, are exempt from GST/HST. That means you do not charge GST/HST to your tenants, and you generally cannot claim input tax credits on the related costs. Without a rebate, the tax you paid on construction or renovation can become a real cost of owning the building.
The New Residential Rental Property (NRRP) rebate is designed to ease that cost. A landlord who bought a newly built or substantially renovated rental property may recover part of the GST or the federal part of the HST.
The federal NRRP rebate
The federal rebate phases out as the unit becomes more valuable, and none is available for a unit with a fair market value (FMV) of $450,000 or more. Because the exact rebate amounts have changed over time, check the current CRA guide for the figures that apply to your situation.
There is also a one-year use condition. The rebate requires the unit's first use to be as a primary place of residence for at least one year, or an equivalent period for certain other arrangements. That residence can be the tenant's, or the owner's or a relation's.
The Ontario rebates
Ontario has its own layer. A rebate of part of the 8% provincial part of the HST is available, subject to a maximum amount, whatever the unit's FMV. It can be claimed even where the federal rebate is unavailable only because the FMV is $450,000 or more.
The Ontario enhanced rebate (Ontario ENRRP), together with the Ontario NRRP rebate, can give a combined rebate of up to 100% of the 8% provincial part of the HST. For a lease of building and land, the combined maximum is generally $80,000. For high-value units, the enhanced rebate is gradually reduced where the FMV is over $1.5 million and under $1.85 million, and none is available at $1.85 million or more.
These Ontario rules have been changing, and eligibility can depend on when construction started. Confirm the current conditions before you rely on any figure.
A different rebate for new purpose-built rentals
If you are building new rental housing rather than renovating, a separate purpose-built rental housing (PBRH) rebate may apply. It returns 100% of the GST or the federal part of the HST for eligible new purpose-built rentals. Construction must begin after September 13, 2023 and before 2031, and be substantially completed before 2036.
A multiple-unit complex needs at least ten residential units, or at least four units with a private kitchen, bath and living area. In addition, 90% of the residential units must be held for exempt leasing.
| Rebate | Key point |
|---|---|
| Federal NRRP | None for a unit with an FMV of $450,000 or more |
| Ontario NRRP | Part of the 8% provincial part of the HST, up to a maximum |
| Ontario ENRRP | Combined with the Ontario NRRP, up to 100% of the 8% provincial part |
| PBRH | 100% of the GST or federal part of the HST for eligible new builds |
What to do next
Claims are made on Form GST524, with Form GST525 for co-op and multiple units. A purchaser-landlord must apply within two years after the end of the month in which tax first becomes payable on the purchase. Watch that deadline closely.
- Gather contracts, invoices and proof of the GST/HST you paid.
- Note when construction began and when it was finished.
- Get an estimate of the unit's fair market value.
- Keep tenancy records showing who first lived in the unit and for how long.
- Ask an accountant or lawyer whether your renovation counts as substantial.
Frequently asked questions
Can I claim a rebate if I renovated an existing rental building?
The NRRP rebate can apply to a newly built or substantially renovated rental property. Whether your work is substantial depends on the facts, so confirm it with an accountant or lawyer before you file.
What if my unit is worth more than $450,000?
No federal rebate is available for a unit with an FMV of $450,000 or more. The Ontario rebate can still be claimed in that case, subject to its maximum.
How long do I have to apply?
A purchaser-landlord must apply within two years after the end of the month in which tax first becomes payable on the purchase. Use Form GST524, and Form GST525 for co-op and multiple units.
Does the unit have to be used as a primary place of residence for a minimum time to qualify for the rebate?
Yes. The rebate requires the unit's first use to be as a primary place of residence for at least one year, or an equivalent period for certain other arrangements.
Sources
- CRA – Type of supply (GST/HST) — canada.ca
- CRA Guide RC4231, GST/HST New Residential Rental Property Rebate — canada.ca
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
This is a real estate question
Start a file online — flat, published fees, reviewed by a licensed lawyer before a dollar is owed.