You know somethings just seem so simple…
Does GST apply to the sale of your home? Absolutely not! Well, maybe. Actually, generally no, but possibly.
You must be thinking, "you moron, it’s simple! There’s no GST applicable on a resale home."
LOL…Assumptions are dangerous. (I’m certain I’ve said this before.)
The fact of the matter is, the only one who can answer this is you or your accountant. It’s all based on how you’ve filed your taxes, so every case is different.
For example, if you own an acreage and run a business on it, or lease a portion of to lets say a cell tower or an oil well you may have obligations to pay GST on the sale of your property. This could apply to a residential property as well – if you operate a home based business, or possibly even if you claim a portion of your home as a home office as a deduction on your income taxes.
So, you have two choices here: you can assume that there is no GST payable, or you can consult an expert or Canada Customs and Revenue Agency to get the answers. They might tell you that GST is payable on those portions that you have claimed as business expenses or generating revenue from.
So I highly recommend you talk to the experts about GST before listing your property for sale where GST if any may be included in the price.
So there you have it. Straight up. Does GST apply in the sale of your property? Yes, No, maybe so.
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Here is some information on the GST/HST on Owner-Occupied Homes:
“If the home is partly used for purposes other than as the owner’s residence (e.g., the owner has an office or operates a bed and breakfast establishment in the home), the sale of the home is exempt provided it was acquired and used primarily (more than 50%) for the owner’s personal use.”
http://www.cra-arc.gc.ca/E/pub/gi/gi-004/gi-004-e.pdf
Sales of Farmland by Individuals:
“Where a sale of farmland includes a residence or house, the sale is viewed as two separate sales:
(i) the portion that includes the house plus the land that is necessary for the use and enjoyment of the house, and
(ii) the remaining portion of land.”
The remaining portion of the land is usually taxable.
http://www.cra-arc.gc.ca/E/pub/gi/gi-002/gi-002-e.pdf
Also the following explains GST/HST on Residential Real Property Sales:
“As a general rule, a supply of real property situated in Canada, including residential property, is taxable unless the transaction is specifically exempted. (The small supplier provisions do not apply to sales of real property.)”
http://www.cra-arc.gc.ca/E/pub/gm/19-2-1/19-2-1-e.html
If in doubt ask your accountant as Sara suggests.
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GST does, however, apply to any commission paid on the sale of your home.
Good point. Never ASSume
GST is also charged on new home construction. There is also a GST rebate which goes back to the builder. This “rebate” is sometimes reflected in the price of the home.
Land when sub divided and sold are subject to GST, as are commercial properties. This is the case in Newfoundland. I assume for the rest of Canada seeing we are discussing GST. When in doubt, write in a clause stating “GST included in sale price” or “GST to be paid by Vendor” … if you are acting on behalf of the purchaser.