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Buying a Home: GST

The issue of GST as it applies to the purchase of a home is a complex issue which should be discussed with your lawyer prior to signing an Offer to Purchase in order to determine whether it must be paid on the purchase of a home, and whether you have the necessary funds to pay for the additional tax cost, if applicable.

Generally, the sale of a home which is currently occupied as a place of residence will be considered a sale of a used residential property and as such, no GST will be paid for the purchase of this home. However, there are limits to this exception. For example, if the home purchased is located on a large rural property in excess of one half hectare. In these situations, GST may be payable on the land and buildings located on the balance of the property as it would not qualify for the used residential property exemption. We note that there are many rules and exceptions to the application of GST as it applies to property purchases which must be considered.

Generally, GST is applicable to new houses purchased from a builder and commercial properties. However, new home buyers are entitled to a GST rebate from the Canadian government. In commercial property purchases, if both buyer and seller are registered for GST purposes, the payment of GST may be avoided.

Finally, it should be noted that GST is payable on all legal fees and on many of the disbursements incurred by a law office, not including the land transfer tax, and other Land Titles charges.

Given the complexity of laws governing the GST, it is a recommendation that you consult your lawyer if you believe that GST is not being applied appropriately in your circumstances.

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Notice: The articles on our website are provided for general information purposes only and should not be relied upon as legal advice or opinion. They reflect the current state of the law as at the date of posting on the website, and are subject to change without notice. If you require legal advice or opinion, we would be pleased to provide you with our assistance on any of the issues raised in these articles.