GST for BC Real Estate 101
What is the Goods and Services Tax (GST) on Real Estate in British Columbia (BC)?
GST on real estate is a Canadian federal tax of 5% that is payable upon completion of the sale of residential properties. For GST, it is better to assume it is applicable unless it is exempt. Examples of exemptions are listed in the last section of this article. For example, it is applicable to newly constructed properties such as presale condos and owner-builder homes.
Assignment of contract purchases from another investor are also subject to GST, and the new buyer would be responsible for paying the GST at the time of completion.
Under the Excise Tax Act, the five per cent Goods and Services Tax (GST) applies to the sale of new residential homes in BC and to the sale of used residential property, if the property was used:
for short-term accommodations (less than 30 days);
as a property in a rental pool; and
as an Airbnb or bed and breakfast (B & B).
When is GST payable, and who pays it?
GST is payable at the time of completion, and the buyer of a real estate purchase is typically responsible for paying the GST on a newly built home. The seller (or developer) does not typically pay GST on new homes. However, if the seller agrees to pay the GST, a clause should be inserted in the contract to confirm this.
When does GST apply to a home purchase?
GST is applicable in most situations where a home purchase is new construction, presale purchase, assignment of contract, substantially renovated residential home, new mobile and floating homes, or sale of vacant land. It does not apply to resale properties or homes that have already been lived in, as the first owner of the property would have already paid it.
Are there GST rebates for new home purchases?
There are two types of GST rebates for new home purchases: the GST New Housing Rebate (full or partial) and the GST New Residential Rental Rebate. The full GST New Housing Rebate is 36% of the 5% GST for homes under $350,000 that a buyer intends to live in as their primary residence.
Partial rebates are available for homes valued between $350,000 and $450,000. Homes over $450,000 receive no GST New Home Rebate and are subject to paying the full 5% GST on the new home purchase. (This was the rebate threshold at the time of writing, the thresholds may have changed since the article was published)
When is the GST due and payable on a property?
GST is due and payable at the time of completion, as per the contract of purchase and sale. Notaries or lawyers will calculate this for buyers when they prepare the statement of adjustments in preparation for completion. Even though the purchase price already included full sales taxes when the property was purchased, the property may still be subject to GST if it was never occupied for .
The nuance is that if the seller already paid for GST when the property first completed, they’ll typically pay GST only on the lift or profit when they go to resell the property within 1 year or never occupied long term as principal residence or tenanted. If the buyer’s agent did not write GST being included in purchase price than the buyer may need to pay the full 5% if the property is not exempt from GST.
Who is Exempt from GST?
Residential property exempt from the GST includes:
the sale of an owner-occupied home if the home is bought and used primarily (more than 50 per cent) for personal use;
used residential rental property for rent for periods of more than 30 days;
the sale of a builder’s personal residence; or
a residential property converted to an office – for example, an entire house converted to a dentist’s office.
GST can get complicated with various circumstances so it’s best to discuss whether GST is payable and how much is payable with an accountant.
*I do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
