How does GST work?
The goods and services tax (GST) is a tax that applies to most supplies of and services in Canada. These goods and services also include real property and intangible personal property. The GST is charged at 5% of the purchase price.
Who pays the GST?
Almost everyone has to pay the GST on purchases of taxable supplies of property and services (other than zero-rated supplies). However, certain persons may not always pay the GST on taxable supplies. These exceptions include First Nations and certain provincial and territorial governments.
The payment of GST can be deferred if the new purchaser is going to continue to offer the property for short term or nightly rental for 90% of the time and becomes a GST registrant. Becoming a GST registrant is a straightforward procedure of completing four forms. Once you are a GST registrant, you are entitled to claim credits for the GST that you pay, for example on legal fees, property management fees, and utilities such as electricity, gas, cable and telephone. You are then required to charge, collect and remit GST on the nightly rentals, which in some cases may be done through your property manager. You will be required to file an annual GST return as well.
GST on New Homes
When you buy a newly constructed home, condominium or townhouse, the entire purchase price including land is taxable supply. 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 5% GST is charged on the purchase price. For more information on potential GST Rebates please follow this link.
GST on Resale Homes
A limited number of goods and services are exempt from GST. This means the GST is not charged. Some common examples of exempt supplies of property and services are: used residential housing; long-term residential accommodation (of one month or more), and residential condominium fees. This means that if a home is considered "used residential housing" then the transaction is exempt from GST. 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 on Nightly Rental Properties
Properties that are used for nightly rental revenue purposes are classified as commercial assets and therefore do not qualify as "used residential housing" and thus do not qualify qualify for a GST exemption. Sellers of these properties must charge GST on their sale. There are accounting processes that allow for an investor to claim a capital acquisition input tax credit on the purchase of a nightly rental revenue property by becoming a GST registrant and using that tax credit to satisfy the requirement to pay GST. You may hear this referred to as "deferring the GST" though there is no actual deferment taking place. In this situation, and any other regarding GST liability, the advice of a professional accountant is highly recommended. 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, 5% 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 such as inspections and lawyers fees.
Please remember that the rules regarding G.S.T. frequently change. While we try to keep our website up to date as much as possible, please do not rely upon the information without talking either to one of our lawyers or your financial advisor.
- Non Residents
Information for Non-Residents buying or selling Real Estate in Canada.
This information is supplied by Manning Elliott LLP.
For more information please click here to be directed to their contact page.
- Property Transfer Tax
Property Transfer Tax
When you purchase or gain an interest in property that is registered at the Land Title Office, you're responsible for paying property transfer tax and filing a property transfer tax return.
In most cases, property transfers are completed by a legal professional.
Taxable transactions include:
- transfer of fee simple
- right to purchase or agreement for sale
- lease or lease modification agreements
- life estate
- Crown grant
- escheat, forfeiture or quit claim
- transfer as a result of corporate reorganization
You pay the tax based on the fair market value of the property (land and improvements) at the date of registration with the Land Title Office, unless you qualify for an exemption or purchase a pre-sold strata unit.
Property transfers are routinely audited. If an audit determines you owe tax, you will receive a notice of assessment. You need to pay the balance shown on the notice to avoid additional interest.
If you disagree with the notice of assessment, you can file an appeal.
Property transfer tax should not be confused with annual property taxes. Annual property taxes are paid yearly for each property you own or have a registered interest in to fund services in your area.
The property transfer tax rate is:
- 1% on the first $200,000,
- 2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000,
- 3% on the portion of the fair market value greater than $2,000,000, and
- If the property is residential, a further 2% on the portion of the fair market value greater than $3,000,000 (effective February 21, 2018). If the property is classified as residential and farm, or is residential mixed class (such as residential and commercial), you pay the further 2% tax on only the residential portion of the property.
Estimate Tax Payable
Use the property transfer tax calculator to estimate the tax you owe based on the fair market value of your property.https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax
- Tourism Whistler
Tourism Whistler is a non-profit organization with a primary focus of marketing the resort municipality to drive traffic to Whistler, globally positioning Whistler as a world class resort to contribute to its long term growth and sustainability. Their marketing efforts extend to local, national and international groups. Owners of whistler.com they act as a one stop shop for hotel bookings, vendors and event bookings. The organization represents 7000 business owners, retail stores and stakeholders in the community.
Membership fees are the driving force to the marketing and sales program. These are mandatory annual fees collected from owners with property located on Resort Lands. This, generally speaking, refers to properties located in and around the Whistler Village & Creekside Village; properties with the Phase 1 & Phase 2 zoning designation.
There are two different types of Tourism Whistler fees:
1. Residential members will pay a reduced rate. Owners using their property personally or renting out on a long term basis may be eligible for the residential rate. You must notify Tourism Whistler of the property’s use throughout the year as it may affect your rate.
2. Commercial Fees are applicable to those renting out their property on a nightly basis to receive an income/ revenue. If you would like more information on how these fees are calculated please visit: https://members.whistler.com/membership/ Alternatively, you can view the following PDF: Whistler Assessment Fees
- Local Mortgage Brokers
Mortgages can be obtained through two channels; either through a bank directly or professional mortgage brokers. There are immediate benefits to you when you work with a mortgage broker as they are able to shop around to different banking institutions and private investors to secure the best rates for you based on your financial situations and the type of property you are interested in purchasing.
We recommend using a local mortgage broker, someone familiar with the in’s and out’s of the local market offering a deep understanding of what your best options are. We recommend Karen Garrett & Eileen Craig of DLC Sea to Sky Mortgages to all of our clients with outstanding feedback and reviews.
DLC Sea to Sky Mortgage Team
DLC Sea to Sky Mortgage Team
- Realtor Referral Network
As a professional real estate agent in the Whistler area, I have met agents from across North America through relocation referrals, conferences, friends, family, etc. I would be happy to speak with you about exchanging contact information to be a part of each other's Realtor referral network.