GST on Buying Real Estate
G.S.T. is payable on the purchase price of newly constructed or substantially renovated residential homes. When you remove or replace most of the house construction components except for the foundation, external walls, interior supporting walls, floor, roof and staircase, it falls under the purview of Substantially Renovated home and GST becomes applicable.
Used residential property purchase is not subject to GST, as the first user has already paid the GST to the seller.
GST is applicable at 5% and makes a substantial dent to a buyer’s budget at the time of closing. You need to prepare for this.
Buyers are eligible for GST rebate if they are going to use the new home as their primary place of residence on a permanent basis. This must be evident at the outset of buying the home. In other words, a recreational cottage, investment property or a property bought as a retirement home in future do not qualify for GST rebate.
New homes priced above $450,000 do not qualify for GST rebate. GST is paid in full. New homes priced at $350,000 and below are eligible for GST rebate at maximum permissible rate of 36% of the applicable GST. Homes priced between $350,000 and $450,000 are eligible for GST rebate on a sliding scale.