In 2023, the federal Department of Finance announced an enhanced GST rental property rebate for purpose-built rental properties such as apartment buildings, student housing, and seniors’ residences.
To qualify, new multiple-unit residential complexes must have four or more self-contained apartments—with private kitchens, bathrooms, and living areas—or 10 or more private rooms or suites, where all or substantially all the units in the complex will be used for long-term residential rental accommodation.
Background
The GST new residential rental property rebate was introduced in 2000 as a parallel rebate to the GST new housing rebate. The rebate is based on the fair market value of each residential unit and is calculated as 36% of the GST or federal portion of the HST to a maximum of $6,300 per residential unit based on a unit with a fair market value of $350,000. The rebate is gradually phased out where units have a fair market value of more than $350,000 and is eliminated where units have a fair market value of $450,000 or more.
A rebate of the provincial component of Ontario HST was introduced when Ontario harmonized with the GST in 2010. The Ontario rebate is calculated as 75% of the provincial component of the HST to a maximum of $24,000 per unit with no phase-out. No rebate of the provincial component of the HST was available in the other participating provinces of Newfoundland and Labrador, Nova Scotia, Prince Edward Island, or New Brunswick.
Quebec currently provides a QST rebate of 36% of the QST payable on the acquisition or construction of a new residential rental complex in the province. The rebate is gradually phased out where units have a fair market value of more than $200,000 and is eliminated where units have a fair market value of $225,000 or more.
Enhanced rebate
The enhanced rebate applies where construction begins after Sept. 13, 2023, but before 2031 and is substantially completed before 2036. If conditions are met, the rebate amounts to 100% of the GST or federal portion of the HST, with no maximum.
Because the enhanced rebate is intended to stimulate supplies of new residential rental units, neither substantial renovations of existing residential complexes nor the construction of new residential complexes with fewer than four units—such as condominium units, single-unit housing, duplexes, and triplexes—will qualify, although they may continue to qualify for the existing new rental property rebate.
The Department of Finance has since clarified that co-operative housing corporations that provide long-term rental accommodations—but not where occupants have an ownership or equity interest— would be eligible for the enhanced rebate. In addition, not-for-profit universities, public colleges, and school authorities may also be entitled to claim the enhanced rebate in respect of new student housing projects.
Provincial relief
The federal government also encouraged its provincial counterparts to consider providing relief with respect to the provincial component of the HST. All five of the participating provinces have announced rebate programs for the provincial component of the HST on new rental properties:
The information in this publication is current as of January 6, 2025.
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