Wednesday, March 28, 2007

Do I have to pay GST on a resale residential Purchase?

GST and the Resale Home

You don't have to pay GST on the purchase price of a used residential home. In other words, the purchase is "exempt" form GST.

Revenue Canada defines "used residential property" to include a previously occupied house, condominium apartment, summer cottage, vacation property or non-commercial hobby farm. They refer to "used" as residential property that has been occupied as a residence before you bought it.

Used property can also mean a recently built house hat is substantially complete and has been sold at least once before you buy it. For example, if a new house is purchased and resold before being occupied, the home's resale price will normally be exempt from GST.

An owner-occupied home is considered a residential property when it's used primarily as your residence. So, if you are self-employed and purchase a resale home that includes a room used as an office, the entire home still qualifies for the GST exception.

However, if your owner-occupied home is not used mainly for residential purposes (for example, a retail store with a small apartment upstairs), only the residential portion is exempt from GST on resale. The non-residential portion of the purchase price is taxable.

If you are planning to purchase a resale home, the seller can supply you with a certificate stating the property qualifies as "used" for GST purposes.

As with most taxes, there are exceptions to the GST rules regarding resale housing. For instance, most sales of real property by charities, non-profit organizations and other public service agencies are exempt form GST. Contact your REALTOR for additional information.

Read more about GST and buyer costs
Toronto Real Estate Board (TREB) Average Prices and Graph

For more information please contact A. Mark Argentino

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829

1 comment:

  1. I agree that it is worth it to buy a used home to save money on GST. Especially with home mortgage rates rising in the last couple years..people need to save money where they can.