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.
Why This Is the Correct Answer
This is correct because 13% HST applies to a new unit bought from a builder in Ontario, and the owner-occupier new housing rebate is available only when the buyer intends to live in the home or have a relation live there. An investor who plans to rent it does not meet that condition.
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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?