New Residential Rental Property Rebate (GST524) in Canada

You are buying a new condo or house to rent out, and you paid GST or HST on it. The usual new housing rebate is for people who live in the home, so you may wonder whether any relief is available to a landlord.

There is a separate rebate for this situation, claimed on Form GST524. This article explains who it is for, how the amount is worked out, how it differs from the owner rebate, and where it stops.

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

Why the owner rebate does not fit a rental

The owner rebate requires that the home be the primary place of residence of the buyer or a relation. A recreational cottage or an investment property does not qualify. An investor who will not live in the unit therefore cannot claim the owner rebate.

A corporation is also shut out of the owner rebate, because only individuals can claim it. But a corporation buying a new residential unit to rent out is not left without relief. A corporation (not a co-op) that 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.

Who can claim the rental rebate

Under section 256.2(3) of the Excise Tax Act, a non-builder purchaser of a residential complex is entitled when tax first becomes payable, if the property includes a qualifying residential unit and the tax is not recoverable as an input tax credit.

A qualifying residential unit is self-contained, held for exempt residential rental, and has a first use as a primary residence for at least one year. In plain terms, the unit must be a real home leased to tenants, not a short-term or business space.

• You are the purchaser, not the builder.
• The unit is self-contained and held for exempt residential leases.
• The GST/HST is not recoverable as an input tax credit.
• You do not qualify for the owner rebate on the same housing.

How the amount is calculated

The formula is A × ($450,000 − B) ÷ $100,000. A is the lesser of $6,300 and 36% of the tax, multiplied 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.

So the rebate shrinks as value rises above $350,000 and is nil at $450,000 or more. Because the test uses fair market value, the unit's value matters, not only the contract price. Your accountant can help you work out the figures for your own purchase.

You apply on Form GST524 within two years after the end of the month tax first became payable.

Owner rebate versus rental rebate

Where the rental rebate stops

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

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. It applies where construction or renovation begins after September 13, 2023 and before 2031, and is completed before 2036. It excludes condos, single units, duplexes and triplexes and cannot be claimed together with the rental rebate on the same property.

What to do next

• Decide honestly whether you or a relation will live in the unit, since that determines which rebate applies.
• Keep your purchase agreement, closing statement and proof of the GST/HST paid.
• Confirm the unit is self-contained and will be held for exempt residential leases.
• Note the end of the month tax first became payable and set the two-year deadline.
• Have an accountant or lawyer confirm whether you are a builder for GST/HST purposes, since that affects eligibility.

Assignments, corporate ownership and provincial add-ons can change the picture, so confirm the details before filing.

Frequently asked questions