Can You Claim the New Housing Rebate on a Newly Built Rental Home in Canada?

You are buying a newly built house or condo from a builder and plan to put a tenant in it. You have heard about a GST/HST rebate for new homes and want to know whether it applies to you.

The short answer is that the owner rebate is aimed at people who will live in the home, but a separate rental rebate exists. The two work differently, and the details matter.

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

Why the owner rebate usually does not fit

The GST/HST new housing rebate is for an individual who acquires the home as their own or a relation's primary place of residence. CRA states that a recreational cottage, an investment property, or a house you plan to use on a more distant occasion does not qualify. An investor who will not live in the unit cannot claim the owner rebate.

There is one nuance. The home may be the primary residence of the buyer or a relation, so a parent may qualify when buying for an adult child or other relation who will live there, if all other conditions are met. A tenant who is not a relation does not count.

The rental alternative: the NRRP rebate

The new residential rental property (NRRP) rebate is for a purchaser who is not the builder. It applies when tax first becomes payable and the property includes a qualifying residential unit, meaning one that is self-contained, held for exempt residential rental, and first used as a primary residence for at least one year. The tax must also not be recoverable as an input tax credit.

The amount is A × ($450,000 − B) ÷ $100,000. A is the lesser of $6,300 and 36% of the tax, adjusted by the unit's floor-space share in multi-unit complexes. 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.

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

Who can claim and who is excluded

Only individuals can claim the owner rebate. Partnerships and corporations cannot, and an individual cannot claim if a partnership or corporation co-owns the house.

Limits and repayment

• The NRRP 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 certain public service bodies.
• 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 exists, but it excludes condos, single units, duplexes and triplexes, and cannot be claimed together with the NRRP rebate on the same property.

What to do next

• Decide, before closing, whether you or a relation will live in the home or whether it is purely a rental.
• Ask the builder how GST/HST is shown on the agreement and statement of adjustments.
• Confirm whether you can recover the tax as an input tax credit, since that affects the rental rebate.
• Calendar the filing deadline for Form GST524.
• Speak with an accountant or lawyer about how your ownership structure affects eligibility.

Frequently asked questions