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. Tax is generally payable, but an eligible rebate may be credited by a builder under the applicable rules. 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. This traditional federal rebate is not the only 2026 relief: see the current first-time buyer and Ontario measures below.
• Used residential resale: most used residential resales are exempt, but builder status, substantial renovations, prior commercial use and other statutory exceptions must be checked.
• Commercial real property: commercial property transactions are generally taxable, subject to specific exemptions and elections. 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): a builder's first rental or other qualifying occupancy of newly built or substantially renovated housing can trigger tax on fair market value, generally at the later of substantial completion and first occupancy. Exceptions include specified personal-use situations for individual builders; not every self-built home triggers tax. CRA home-construction guide.
• Purchaser self-assessment (ETA s.221): the seller generally does not collect on a taxable sale to a registered purchaser, except notably certain residential sales to individuals. A registered purchaser acquiring the property primarily for commercial activity generally reports tax on its regular return; other cases can require GST60 and a different deadline. An ITC depends on entitlement, not registration alone.

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 205 (tax on real property acquired):  $50,000
  Line 106 (ITCs, 100% commercial use):      $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 an Ontario new home priced at $650,000 before tax, gross HST is $84,500. The traditional federal rebate has phased out, but it would be wrong to conclude that the buyer has no federal rebate.

Current new-home relief in 2026

The federal first-time home buyers' rebate received Royal Assent on March 12, 2026. Eligible buyers can recover the federal tax on homes up to $1 million, with relief phased out between $1 million and $1.5 million. Builder purchases generally require an agreement entered into on or after March 20, 2025 and before 2031, plus first-time-buyer, residence, construction and completion conditions. A qualifying $650,000 purchase can therefore have $32,500 of federal relief. CRA eligibility, Finance enactment notice.

Ontario also has temporary enhanced relief for qualifying new-home agreements from April 1, 2026 through March 31, 2027. It includes an enhanced provincial rebate and a separate Ontario housing affordability payment, with coordination so the federal portion is not refunded twice. Buyer, agreement, use and completion requirements matter; a corporation is not automatically entitled to an individual homebuyer rebate. Use CRA Notice 346 for the applicable calculation and application route.

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. Check the self-supply event, valuation date and exceptions when a builder first rents new housing. Separate new-residential-rental and purpose-built-rental rebates may apply; they are not the owner-occupied rebate.
• 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. Eligible commercial property purchases may generate offsetting ITCs; confirm the purchaser's use and reporting route.