A real estate investor buys a new condominium unit directly from a builder in Ontario for $450,000, intending to rent it to tenants. What GST/HST applies to the purchase?
Correct Answer
D) 13% HST, without the owner-occupier new housing rebate
New housing sold by a builder is taxable, so Ontario's 13% HST applies ($450,000 x 13% = $58,500). The GST/HST new housing rebate requires the buyer to intend, when signing, to use the home as their own or a relation's primary residence, so an investor buying to rent does not qualify. CRA directs landlords to the separate new residential rental property rebate, which has its own conditions.
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- → Which of the following best describes when land transfer tax is typically paid?
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A real estate investor owns a rental property that they purchased 5 years ago for $300,000 and sells for $450,000. What portion of the $150,000 capital gain is subject to income tax?
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A taxpayer bought a city home and a cottage for $400,000 each in the same year and has owned both ever since. Both qualify as a principal residence for every year. The city home is now worth $800,000 and the cottage $600,000, and both are sold this year. Which designation minimizes tax?