New Residential Rental Property Rebate (GST524) in Canada: Who Qualifies

You bought a new home to rent out, paid GST/HST on it, and now you hear that the owner-occupier rebate is not for you. That is correct, but a separate federal rebate exists for landlords, and it is easy to miss.

This article explains who can claim the new residential rental property rebate, what the unit must look like, how the amount is worked out, and where the rebate stops or has to be paid back. Your facts matter, so treat this as a map and not a verdict.

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

What the rebate is and how it differs from the owner rebate

The new housing rebate for owners is meant for people who live in the home, or whose relation does. An investor who will not live in the unit cannot claim that owner rebate. The new residential rental property rebate, often shortened to NRRP, is the landlord's version. It is for units leased or held for lease as residences, and it uses fair market value to measure the price.

A corporation is not shut out. A corporation that is not a co-op and that is a purchaser and landlord can claim this rebate on Form GST524 if the purchase was taxable and it is not the builder. By contrast, partnerships and corporations cannot claim the owner rebate.

Who qualifies

The rebate belongs to a non-builder purchaser of a residential complex. The entitlement arises when tax first becomes payable, and the property must include a qualifying residential unit. The tax must also not be recoverable as an input tax credit.

A qualifying residential unit has three features:

• It is self-contained.
• It is held for exempt residential rental.
• Its first use is as a primary residence for at least one year.

The rebate is also not paid where the individual qualifies for the new housing rebate on the same housing. In other words, you are in one lane or the other.

How the amount is worked out and when to apply

The formula is A × ($450,000 − B) ÷ $100,000. A is the lesser of $6,300 and 36% of the tax, and in a multi-unit complex that figure is multiplied by the unit's share of the floor space. 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 in which tax first became payable. Because fair market value drives the result, a unit worth more than the top of the range gets nothing from the formula. Ask your accountant how the value will be established for your property.

When the rebate is not paid or must be repaid

The rebate is not paid in these situations:

• You bought an existing occupied rental and no GST/HST was payable.
• The unit is not self-contained or not held for exempt residential leases.
• The tax is recoverable under another law.
• The buyer is a public service body eligible for the PSB rebate for the federal part.

There is also a repayment rule. If a qualifying unit that is not in a multi-unit complex 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. It is a 100% federal-part rebate with no fair market value phase-out, and it excludes condos, single units, duplexes and triplexes. It cannot be claimed together with the NRRP rebate on the same property.

What to do next

• Confirm whether you or a corporation bought the unit, and whether you are the builder.
• Check that the unit is self-contained and will be held for long-term residential rental.
• Find out whether the GST/HST you paid is recoverable as an input tax credit.
• Note the date tax first became payable so you can track the filing window.
• Ask an accountant or lawyer before selling a unit soon after its first occupancy.

Frequently asked questions