GST on Real Property

Definition

Real property in the GST/HST system covers land, buildings, and interests in real estate. Unlike most tangible goods, real property is sold under special rules: the tax treatment depends on whether the property is new residential, used residential, or commercial; whether the purchaser is a registrant; and whether the seller is a builder within the meaning of ETA s.123(1). Two features make real-property GST/HST distinctive: the New Housing Rebate for owner-occupied new homes and the mandatory self-supply rules that capture a builder's own use of newly built residences.

Key rules

• New residential housing: sale of a newly constructed or substantially renovated home is a taxable supply. The purchaser pays full GST or HST on closing. A New Housing Rebate under ETA s.254 may recover a portion of the federal component where the price is below $450,000 and the home is intended as the purchaser's primary place of residence. Provincial new-housing rebates (Ontario, Nova Scotia) operate in parallel.
• Used residential resale: an individual's resale of a used residential complex is exempt under Schedule V, Part I, s.2. No tax is charged on closing.
• Commercial real property: sales and leases of commercial property are fully taxable. A non-resident or non-registrant seller may still be obligated, but the common case is that a registered purchaser self-assesses under ETA s.221(2) and claims an offsetting ITC on the same return.
• Residential rent: long-term residential rent (one month or more) is exempt. Short-term accommodation (less than one month, charges over $20 per day) is taxable, which catches many short-term rental operators.
• Builder self-supply (ETA s.191): when a builder substantially completes a new residential unit and either rents it out long-term or occupies it personally, the builder is deemed to have made a taxable self-supply at fair market value, owing GST/HST on that deemed sale.
• Purchaser self-assessment (ETA s.221): on a taxable sale of real property to a registrant, the purchaser (not the vendor) accounts for the tax on its own return. Where the property is used in commercial activity, an offsetting ITC is often available, resulting in a cash-neutral filing.

Example

A BC corporation buys a commercial warehouse for $1,000,000 on July 1, 2026 from a registered seller, intending 100% commercial use. The corporation is a registrant.

ETA s.221 self-assessment
GST on taxable real property:  $1,000,000 × 5% = $50,000
Vendor does NOT collect this tax (sale to a registrant).
Purchaser reports on GST34:
  Line 103 (tax collected/self-assessed):      $50,000
  Line 106 (ITCs on commercial use 100%):      $50,000
  Net impact on return:                             $0

Accounting entries on closing
Debit:  Land and Building                 $1,000,000
Debit:  GST Recoverable (offsetting ITC)     $50,000
Credit: Cash (or mortgage payable)        $1,000,000
Credit: GST Payable (self-assessed)          $50,000

For a new home purchased by an individual for $650,000 in Ontario, HST of 13% adds $84,500. Only a partial New Housing Rebate (if any) applies; the full rebate phase-out runs above $450,000 for the federal component.

Common mistakes

• Assuming a commercial real estate purchase is cash-negative for GST. For a registrant, the s.221 self-assessment plus offsetting ITC usually nets to zero cash.
• Failing to self-assess on a taxable real-property purchase, then missing the ITC. CRA can assess the tax without allowing the offsetting ITC if the claim window has closed.
• Treating short-term rentals as exempt residential rent. Nightly or weekly rentals are taxable accommodation.
• Forgetting the builder self-supply rule. A builder who constructs a home and then rents it out owes GST/HST on the fair market value at the time of first occupancy.
• Claiming the New Housing Rebate on a property intended as a rental. The rebate requires primary-place-of-residence use by the purchaser or a specified relative.

Related concepts

Real-property rules layer on top of supply classification, because each property's treatment depends on whether it is residential or commercial. Place of supply is always the province where the property is located. Commercial property purchases generate offsetting ITCs on the same return.