GST (BC)
What is it?
The Goods and Services Tax (GST) applies to various real estate transactions in British Columbia. Here’s a detailed breakdown of when and how GST is applicable:
GST on New and Substantially Renovated Housing
- Generally, the purchaser of the property is responsible for paying GST. It may be included in the sale price, but it is essential to verify this with the seller.
- New Residential Properties: GST applies at a rate of 5% on new residential properties.
- Substantially Renovated Housing: Typically applied when 90% or more of the interior has been removed or replaced. This includes the removal or replacement of most house components except for the foundation, external walls, interior supporting walls, floor, roof, and staircase.
○ If a new home is purchased and then torn down or substantially renovated, GST applies as the home is considered new for GST purposes. The owner must self-assess and remit GST to the CRA when construction is completed.
Exemptions
GST generally does not apply to:
- Resale (Used) Residential Properties
- Unless the property is a strata hotel, short-term rental, mixed-use property, or similar.
- Principal Residences and Long-term Rentals
- Used residential properties used either as a principal residence or longterm rental.
- Owner-Occupied Homes
- Bought primarily for personal use.
- Used Residential Rental Properties (Temporary Accommodations)
- Rented for periods over 30 days.
- Sale of a Builder’s Personal Residence
- Residential Properties Converted to Offices
Specific Scenarios
- Short-term Accommodations: GST applies to properties used for short-term accommodations (less than 30 days), rental pools, or Airbnb/B&Bs.
- New Manufactured Homes: GST applies to the full purchase price. For new manufactured buildings leased for commercial use, GST applies only to the lease.
GST New Housing Rebate
You may be eligible for a GST rebate if:
- You buy a new home as a primary residence, priced up to $450,000. The rebate is 36% of the 5% GST paid on the first $350,000, phasing out between $350,000 and $450,000.
- You buy a substantially renovated home.
- You build your own home, provided the fair market value does not exceed $450,000.
Presale Agreements
Under presale agreements:
- The 5% GST is due when ownership and possession take place.
- GST on the deposit amount isn’t payable when the deposit is made but on the full amount when the deal completes.
- For partial payments made before completion, GST must be paid with each partial payment.
Vacant Land
GST applies to the sale of vacant land if:
- Purchased from a developer.
- Previously used for business purposes.
- Subdivided into three or more lots.