It is surprising to me just how unfamiliar an average pre-construction condo investor is with the topic of HST and the HST rebate. This subject warrants a deeper look and greater awareness which prompted me to write this post.

First let’s define what I mean when I call someone a condominium investor. A condo investor is any individual or corporationthat is purchasing a property with an intention to generate income. To clarify, if you already occupy and own a home it is considered your PRIMARY residence. When another property is purchased and you do not intend on occupying it, or selling the PRIMARY residence to move into it, this would qualify you as a condo investor.

Despite the fact that a large portion of the purchasers I meet, may not be decided at the time of signing the APS on whether they will occupy the unit themselves upon completion, whether their family members, or possibly a growing offspring will do so. It is important to be aware that should the property NOT be used as the primary place of residence by the purchaser or their immediate family, additional funds must be allocated towards closing, up to $27,000.

To better illustrate my point, lets imagine a fictional scenario where a condo investor Jake walks into his lawyers office to close on his 1 Bedroom + Den investment condo purchased 4 years ago for $400,900. As per the chart included to the right, in addition to the standard closing costs Jake would also be required to remit $27,213 to the builder that he purchased the condo from. The builder will then transfer these funds to the CRA on Jakes behalf. Once a one-year lease is signed by a tenant for the property, a rebate may be filed. It takes approximately 2 months for the CRA to process the rebate and for the investor to get the rebate cheque in the mail. Most often the rebate amount will be nearly all of the $27,213 paid earlier.

Purchasers have up until occupancy closing to determine whether the property will be a primary residence or an investment. Once Occupancy closing comes and the purchaser comes in to see their lawyer, a disclosure will need to be signed indicating whether you are an investor or not. There is no way to “beat the system” and avoid paying the HST rebate. As a matter of a fact from the beginning of Occupancy and for a period of about 6 months after Final Closings, builders will monitor the MLS system to see which purchaser listed their suite for Sale or for Lease. If a listing is found, and frequently they are, this will immediately indicate that the purchaser is an investor. If this was not truthfully disclosed to the lawyer and builder, the developer can proceed to fine the purchaser for the rebate portion of the HST that would have been owed.

To apply for an HST Rebate the following documents are required:

1. Statement of Adjustments (Received on Final Closing from your Lawyer)
2. Original Agreement of Purchase and Sale (From the Builder)
3. Copy of Signed Lease (Minimum One Year)
4. Form 524 – GST/HST New Residential Rental Property Rebate Application
5. Form RC7524-ON – GST524 Ontario Rebate Schedule

Once these documents are compiled and completed, they will need to be mailed to – Sudbury Tax Centre 1050 Notre Dame Avenue, Sudbury, ON, P3A5C1.

If you still have questions regarding the rebate or want to learn more please visit the following link:
https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4231.html

Happy Investing!