Enhanced GST Rebate for Landlords of New Residential Buildings Announced by Federal Government
The Canadian federal government has recently unveiled a new and enhanced goods and services tax (GST) rebate for landlords of new residential rental buildings, in response to the growing concerns surrounding housing affordability in Canada. The significant rebate will apply to specific types of rental housing, such as certain apartment buildings, student housing, and senior residences, designed for long-term rental accommodation. In this blog post, we'll delve into the details of this rebate, its eligibility criteria, and the implications it holds for landlords and the real estate market.
The Enhanced GST Rebate:
Effective immediately, the enhanced GST rebate will provide a 100% rebate (up from 36%) on the GST and federal portion of HST for eligible landlords. This change is designed to promote the construction of purpose-built rental housing and boost the overall housing supply in Canada. Notably, the existing GST phase-out thresholds for qualifying rental housing projects will be removed, expanding the scope of eligible properties.
To qualify for this enhanced rebate, rental buildings must meet certain criteria:
- Construction Dates: Construction must commence on or after September 14, 2023, and before December 31, 2030. The construction must be completed by December 31, 2035.
- Property Types: The enhanced rebate will apply to specific property types, including apartment buildings, student housing, and senior housing must have at least 10 units.
- Minimum Units: Generally, rental buildings must have at least four self-contained apartments for residential units to qualify. Student and senior housing must have at least 10 units.
- Residential Units: The building must consist of at least 90% long-term residential units to qualify. Substantial renovations of existing residential properties are not eligible for this enhanced rebate.
Provincial Sales Tax: A Synchronized Symphony
In addition to the federal government's announcement, they have called upon all provinces to remove their provincial sales taxes (PST) in line with the federal relief. Some provinces, such as Ontario and Newfoundland and Labrador, have already committed to removing the provincial portion of the HST on purpose-built rental housing. The British Columbia government has also pledged to eliminate the PST from certain construction costs related to purpose-built rentals.
These changes in the GST rebate for landlords of new residential buildings represent a significant opportunity for those involved in the real estate market. However, the details and implications of this tax relief are still evolving, and it's essential to stay informed about the latest updates. If you're a landlord or a real estate investor, it's advisable to consult with experienced tax professionals to assess how these changes could affect your specific situation. Be prepared to adapt your strategies as new information becomes available. For any questions or assistance, don't hesitate to reach out to your local advisor or contact us directly.
In conclusion, the federal government's enhanced GST rebate for landlords of new residential rental buildings is a promising development for the Canadian real estate market. By encouraging the construction of purpose-built rental housing, this rebate aims to address housing affordability concerns and stimulate economic growth in the sector. Stay tuned for further updates as this tax relief program unfolds. The path to real estate success is illuminated with opportunities like these.
As a REALTOR® specializing in Commercial Real Estate, I welcome to opportunity to assist you further.
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Article By: Patrick Hulley, Broker of Record – President
RE/MAX RISE Executives, Brokerage – Commercial Division