Thursday, March 22, 2007

Does the GST Rebate Affect You?
- by Stan Galbraith

There is a GST rebate on new home construction or on homes that have been substantially renovated. A substantial renovation means a house has been gutted down to the floors and walls, or better yet, down to the foundations.
To qualify for the rebate, the Purchaser or a close relative must be the first individual to occupy the home after a substantial completion of the construction or renovation. In other words, when someone purchases a new home for rental or investment purposes, they are not eligible to receive the GST new housing rebate.

With so much volatility in the market, I have seen several instances where someone purchases a property fully intending to live in their new home. Then, before the closing date, there is a change of plans. In one case, the purchaser's employer transferred them to a new city while their new home was under construction. The purchaser was forced to close on their purchase so they would not lose their deposit. They then immediately resold the property without ever living there.

On first appearance this would seem to disqualify their ability to obtain GST new housing rebate at a cost of several thousand dollars.

However, there is an exception in the GST legislation. Under this exception, the purchaser can still make an exempt sale before the property is occupied by anyone. An exempt sale means the purchaser can resell the property without charging any GST on the basis the sale is used residential housing. The exception also allows the purchaser who has an unexpected change of plans to still qualify for the rebate.

So long as the original intention was to occupy the home, the purchaser can still obtain a rebate. Anyone in this situation is well advised to retain some documentation to prove they had an intention to occupy the property and to prove the change of plans that prevented their occupancy.

Remember, the GST rebate reaches a maximum when the total home price is $350,000 and is gradually phased out. It disappears completely for any home where the total price is $450,000 or greater.

Losing the GST rebate on new housing can cost thousands of dollars. At least there is a means for many people to preserve the rebate when they do not actually occupy the house.

About Stan Galbraith
Stan is a very experienced Real Estate lawyer. Consistently our clients have expressed appreciation for the competent, “hands on” manner in which he and his staff have dealt with their real estate transaction in this complex market. Stan can be reached at Galbraith Law Office, 217, 14925-111 Avenue, Edmonton AB T5M 2P6. Phone 483-6111.

If you’re thinking of buying or selling, please contact us at:
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