How do you find out how much HST you will have to pay when you are using a new construction residence for anything other than a primary residence?

 

First, call us at HST Relief: Rebates and Loans for a free consultation about what expenses you can expect on closing of an investment property, including how much cash you need to have available to cover the portion of HST due (the HST Rebate amount) when the preconstruction property is not being used as a primary residence. Investors can then apply for the HST Rebate back from CRA after closing if they meet certain requirements (chielfy, having a 1 year lease).  Each circumstance and its eligibility for the HST rebate depend on many variables, such as who is moving in to the newly constructed condo, what circumstances the property was purchased under and how the property will be used, etc. Do not forfeit your right to the HST Rebate by not understanding CRA’s criteria to qualify for the HST Rebate. Instead of reading CRA’s 74 page manual, call HST Relief: Rebates & Loans and tell us about your real estate investment situation. Our consultation is free. If you are concerned about having enough liquid cash to cover the HST, HST Relief: Rebates & Loans offers loans in the form of bridge financing to cover the HST amount until we recover the rebate from CRA 45-60 days after closing. It is a very short term loan that ensures you will maintain your investment by closing the property successfully on time.

 

The HST amount due on closing for an investment condo is weighted based on the purchase price and ranges from $16,000 to $29,000 and depends on the original purchase price the investor agreed to in the Purchase Agreement. Remember that the amount of HST due on closing is the same as the HST rebate amount that you can file for after closing. To qualify for the rebate, you must have a 1 year lease in place with a renter.  There are other more specific criteria that are less often an issue, but still important to understand prior to closing.  Be very careful if you plan to put the new construction investment in a company name.  You must have the proper paperwork in place to still obtain the HST Rebate from CRA.   

 

If you’re searching online, be aware of many incorrect websites and information floating on the web. If you are interested in a reliable chart that gives approximate HST costs, check out Genworth’s site here. For more online reading, check out our clients’ FAQs with our team’s detailed answers posted here.

 

In addition to the HST amount due on closing, you will have other substantial closing costs. These generally include: Levies, development charges, an appraisal fee for your mortgage, lawyer’s fees and sometimes the taxes to be paid upfront. It’s not unlikely that a small condo investment will yield up to $15,000+ in closing costs outside of the portion of the HST that will also be due on closing if the property is not going to be used as your primary residence.