Which of the following real estate transactions is subject to GST/HST?
Correct Answer
D) Purchase of a new home from its builder
GST/HST applies to newly constructed homes sold by builders or developers, as this is considered a commercial transaction. Resale homes sold between individuals are exempt from GST/HST as they are considered used residential property.
Why This Is the Correct Answer
Option D is correct because newly constructed homes sold by builders constitute commercial transactions subject to GST/HST under the Excise Tax Act. Builders and developers are engaged in commercial activity when selling new residential properties, making these transactions taxable supplies. The GST/HST applies to the full purchase price of new homes, significantly impacting the total cost for buyers. This federal tax obligation is mandatory for all new residential construction sales across Canada, with rates varying by province (5% GST plus provincial sales tax or combined HST rates of 13-15%).
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- → In Ontario, what is the standard Land Transfer Tax rate for a residential property purchase of $400,000?
- → Which of the following best describes when land transfer tax is typically paid?
- → A first-time buyer purchases a $450,000 home in Ottawa, outside the City of Toronto. Which land transfer tax relief can they claim?
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