- The NRRP 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.
- The rebate application has a time limit of two years after the end of the month in which tax first becomes payable.
- Whether selling or moving in early affects your rebate depends on your facts, so confirm with an accountant or lawyer before you act.
Owners sometimes receive an HST rebate on a new rental and later want to sell, or move in themselves. Before you do, it helps to understand what the rebate was built around.
This article explains the use requirement that sits behind the rebate. Questions about repaying a rebate or being treated as having sold the unit to yourself turn on detailed facts and timing, so they are best confirmed with an accountant or lawyer.
Why the first year matters
The NRRP 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.
That requirement is the starting point for any plan to sell early or change how the unit is used. A sale or a move-in during or soon after that first year is the kind of change worth reviewing before you act.
Selling or moving in: questions to ask first
Whether an early sale or a change of occupant affects a rebate you already received depends on who lived in the unit, for how long, and under what arrangement. It also depends on how the rebate was claimed. These details are best checked with an accountant or lawyer before you list the unit.
- Who first lived in the unit, and when did they move in?
- Has a full year of use as a primary residence passed?
- Was the occupant a tenant, you, or a relation?
- Which rebate did you claim, and on which form?
- Is the property a purpose-built rental, a multiple-unit complex or a single unit?
How the rebate was claimed
NRRP rebates are claimed 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.
Keep a copy of what you filed. Those details help an adviser see which conditions applied to your claim.
If you claimed the purpose-built rental rebate, other conditions apply. A multiple-unit complex needs at least ten residential units, or at least four units with a private kitchen, bath and living area, and 90% of the residential units must be held for exempt leasing.
Which rebates may be in play
Knowing which rebate you claimed matters, because each one has its own conditions. The federal NRRP rebate lets a landlord who bought a newly built or substantially renovated rental property recover part of the GST or the federal part of the HST. The rebate phases out, and none is available for a unit with a fair market value (FMV) of $450,000 or more.
In Ontario, 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, 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. The enhanced rebate is gradually reduced for units with an FMV over $1.5 million and under $1.85 million, and none is available at $1.85 million or more.
The purpose-built rental housing rebate is 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.
Ontario rental HST rebate rules have been changing, so which version applies to your property depends on your facts and is worth confirming with an accountant or lawyer.
What to do next
- Pause any plan to sell or move in until you have confirmed how the rebate conditions apply.
- Gather your purchase documents, the rebate forms you filed, the lease and the move-in dates.
- Ask an accountant or lawyer whether the sale or change of use affects the rebate you received.
- If you moved from living in the home to renting it out, ask about the income tax election that avoids a deemed sale on that change.
Frequently asked questions
How long must the unit be lived in for the rebate?
The first use must be as a primary place of residence for at least one year, or an equivalent period for certain other arrangements. The resident can be the tenant, the owner or a relation.
Can I move into the unit myself?
The one-year first-use rule allows for the owner's or a relation's residence as well as a tenant's. Whether moving in affects your particular rebate depends on the facts, so confirm with an accountant or lawyer first.
Do I have to repay the rebate if I sell early?
That depends on your facts, including how long the unit was used as a primary residence and how the rebate was claimed. Get advice before you sell so you know the consequences in advance.
What is the deadline to apply for the rebate?
A purchaser-landlord must apply within two years after the end of the month in which tax first becomes payable on the purchase.
Sources
- CRA Guide T4036, Rental Income — 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.
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