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Claiming the New Residential Rental Property Rebate in Canada

When a person purchases a new residential rental property in Canada, you have to pay Goods and Services Tax (GST) or Harmonized Sales Tax (GST) on the sale. However, there is a rebate available to landlords who purchase a new residential rental property. It is called the New Residential Rental Property Rebate.

However, there are a few conditions that must be met in order for you to qualify for this rebate.

  • The first people to occupy the property must be tenants who have signed a lease for at least one year, and must not include the property owner
  • You must claim the rebate directly from the government, not from the builder. This can be done by completing an application with the Canada Revenue Agency (CRA) after closing.
  • You must have paid GST or HST:
    • When purchasing a new or substantially renovated residential property, OR
    • When building a residential rental property or making an addition to a multi-residence rental complex, OR
    • If you are a builder who had to account for GST/HST under self-supply rules after selling a residential unit to an individual and leasing the related land to that individual under a single written agreement, OR
    • If you had to account for GST/HST under the self-supply or change-in-use rules because you made an exempt lease of land used for residential purposes

In short, you must have paid the GST/HST on a rental property upfront. You can then apply to receive a refund from the CRA.

Applying for the New Residential Rental Property Rebate

To apply for the New Residential Rental Property Rebate, you must complete an application within two years after the property closes or sells. Depending on the nature of the property, you may be required to complete additional applications or forms. You then send these forms to the CRA along with any supporting documents requested on the form.

Note that if you receive the rebate, and then sell the residence within one year, you may be required to repay the rebate. However, this does not apply if the person who the property is sold to uses it as their primary residence.

It is recommended that you file for the New Residential Rental Property Rebate as soon as possible following the closing of a sale, right after you find a tenant, as the GST/HST could be quite costly financially, so you’ll want to make sure that you get your rebate as soon as possible.

As with nearly all communication with the CRA, it can be complex and even frustrating at times. If you need assistance CRA tax issues, please contact us today.