Associated Taxes

Property Transfer Tax

This is a Provincial Government Tax that applies to all transfers of real estate and is payable on the completion date. The rate of the tax is 1% on the first $200,000 of the purchase price and 2% on the balance.

Goods and Services Tax

The GST is a 6% tax that applies to the purchase of new construction and on the resale of accommodations that have been rented out for short term or nightly rental. The payment of the GST can be deferred if the new purchaser intends to use the accommodation for short term or nightly rental at least 90% of the time and s/he becomes a GST registrant.

GST on New Homes

When you buy a newly constructed home, condominium or townhouse, the entire purchase price including land is taxable. If the home is going to be your primary place of residence, it may qualify for a partial GST rebate, depending upon the sale price. If the property is to be rented to tenants, the full 6% GST is charged on the purchase price. The GST rebate is only available on homes lower than approx. $450,000 and even then a sliding scale is applicable to homes over $350,000.

GST on Resale Homes

There is no GST on the purchase price of a used residential property that has been occupied as a residence before you bought it. Used residential property includes an owner occupied house, condominium, apartment, summer cottage, vacation property or non-commercial hobby farm. Used property can also mean a recently built house that is substantially complete and has been sold at least once before you buy it. GST and Real Estate Deals

GST applies to most of the services provided in completing a real estate transaction. For example, 6% GST is applied to the real estate commission. The person responsible for paying the commission - usually the vendor, pays the tax. GST applies to many other services involved in real estate transactions.

Withholding Tax on Rental Income (for non-residents)

You may obtain an exemption from the 25% non-residents are required to pay to Revenue Canada by filling out a simple form called an NR6, explaining that the projected rental income is less than the anticipated expenses associated with the property. After filling out this form, you must also file a tax return with Revenue Canada.