New Housing Rebate When Buying Through a Numbered Company in Canada

Buying through a numbered company is common for investors and for people who want a separate legal owner. But if you plan to live in the new home, the structure can cost you a federal GST/HST rebate that you would otherwise be eligible for.

This article explains why the rebate is limited to individuals, what happens if a company is on the agreement, and what relief may be available to a company that buys to rent. Because the choice is usually made before closing, it is worth understanding early.

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

Why a company cannot claim the new housing rebate

The new housing rebate is available where a builder sells a new house or condo unit to an individual who acquires it as their own or a relation's primary place of residence. CRA's guide says only individuals can claim it, and partnerships and corporations cannot.

A company does not have a primary place of residence in the way a person does. The rebate is built around someone actually living in the home, and the intent to use it that way must be evident at the outset of buying.

Co-ownership with a company

It is not only a company-only purchase that causes trouble. An individual cannot claim if a partnership or corporation co-owns the house. If you and your company are both on title, that can shut the rebate out.

By contrast, when several individuals own a house together, only one of them can claim. The rebate is paid to that claimant, the other owners are listed as co-owners on Form GST190, and it can apply if all other conditions are met by at least one of the individuals.

Court decisions have raised the question of whether everyone who signed the purchase agreement needs to qualify. That is case law rather than CRA policy, so confirm the current position with a lawyer before you sign.

What the buyer and the home must satisfy

• The buyer is an individual and the home is a new single unit residential complex or condo unit bought from a builder.
• Total consideration is under $450,000 and the buyer has paid all applicable tax.
• The first occupant is the buyer or a relation, or the buyer makes an exempt sale of the home before anyone occupies it.
• The home is the primary place of residence of the buyer or a relation, such as a parent, child, sibling, spouse or common-law partner.

For this rebate only, former spouses and former common-law partners also count as relations. The rebate phases out between $350,000 and $450,000 and is nil at $450,000 or more.

If the company is buying to rent out

A corporation is not shut out of all relief. A corporation that is not a co-op and is a 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.

That rebate requires 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. Its amount uses the unit's fair market value, and the application is due within two years after the end of the month tax first became payable.

It is not paid where an individual qualifies for the new housing rebate on the same housing. So a rental company and a live-in owner are on separate tracks.

What to do next

• Decide who will live in the home before the agreement is signed, because that drives the structure.
• If the home is for you or a relation, ask a lawyer whether buying personally, and not through a company, preserves the rebate.
• Check how the agreement, any assignment and the title will name the buyers.
• If the company is buying to rent, review the GST524 conditions and the two-year deadline.
• Talk to an accountant about the income tax side, which is a separate question from the GST/HST rebate.

Frequently asked questions