Rental Property Rebates Available to Ontario Landlords

Buying or building a new rental property in Ontario can involve a large amount of GST/HST. Several rebates exist to give some of that tax back to landlords, but they have different rules and are easy to mix up.

This article explains how the main rebates differ and what usually decides whether you qualify. Rebate rules, particularly Ontario's, have been changing, so confirm the current rules before relying on any figure here.

Federal and Ontario rebates are separate

The federal New Residential Rental Property (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. It phases out, and none is available for a unit with a fair market value (FMV) of $450,000 or more.

Ontario has its own rebates of the provincial part of the HST. Knowing which rebate you are looking at is the first step, because each has its own limits and dates.

These rebates matter because long-term rentals of residential accommodation (one month or more) are exempt from GST/HST. The landlord does not charge GST/HST and generally cannot claim input tax credits on related costs.

Shorter stays are treated differently. GST/HST must be charged on rooms rented for less than one month, but not when the same individual rents the room as a residence for a continuous period of one month or more. Units rented for $20 or less per day are exempt whatever the rental period.

Commercial rentals are also different. Sales and rentals of commercial real property are taxable, and for commercial leases, property taxes the tenant pays are treated as part of the rent and are subject to GST/HST in the same way.

Purpose-built rental housing rebate

The purpose-built rental housing (PBRH) rebate is 100% of the GST or 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.

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.

Ontario rebates

• Ontario NRRP rebate: a rebate of part of the 8% provincial part of the HST, 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.
• Ontario enhanced rebate (ENRRP): together with the Ontario NRRP rebate, it 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.
• High-value units: the Ontario ENRRP 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.

Timing rules and temporary measures for new rental housing have been changing, and the date construction started can matter. A lawyer or accountant can confirm which version applies to your project.

Comparing the rebates

Claiming and the one-year use rule

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.

The NRRP rebate also requires the unit's first use to be as a primary place of residence, whether the tenant's, the owner's or a relation's, for at least one year, or an equivalent period for certain other arrangements.

What to do next

• Write down the purchase or construction dates, the unit's FMV and the date tax first became payable.
• Confirm whether the unit is a single unit or part of a multiple-unit complex.
• Note the tenant's or occupant's move-in date to track the one-year use period.
• Diarize the two-year deadline for Form GST524.
• Ask a lawyer or accountant which federal and Ontario rebates apply before you close or file.

Frequently asked questions