If you purchase a new condo in Montreal, you may be eligible for a tax rebate that could help reduce your closing costs.
As you are well aware, in Canada most goods and services are subject to the goods and services tax (GST) and in Quebec they are subject to the Quebec sales tax (QST). Both these taxes apply to the sale of newly built condos. However, if you purchase a new construction condominium, under certain conditions you may be entitled to a rebate on the GST and the QST that you pay.
The GST/QST New Housing Rebate program allows home buyers to receive a rebate (or partial refund) on the taxes paid on the purchase of newly constructed homes that will be used as a primary place of residence.
In order to qualify for this rebate, all the following conditions must be met:
- You purchase land and new housing from a builder;
- The housing is a single-unit residential complex (including a duplex) or a residential unit held in co-ownership (a condo);
- You purchase the housing to be your primary place of residence, or the primary place of residence of a relative;
- Ownership of the property is transferred to you once the construction is substantially completed;
- The housing and land were acquired in the same transaction;
- You or one of your relatives is the first to occupy the premises once construction is complete.
How is the GST/QST New Housing Rebate calculated?
The GST rebate
The federal portion of the rebate is calculated at 36% of the GST paid on the purchase price of the condo, to a maximum of $6,300. The rebate is progressively reduced when the price of the new condo is greater than $350,000 but less than $450,000. There is no GST rebate available where the purchase price is $450,000 or more.
The QST rebate
The provincial tax rebate is equal to approximately 50% of the total QST paid on the purchase price of the new home. The maximum QST refund amount is $9,804. The rebate is progressively reduced when the price of the condo exceeds $200,000, but is less than $300,000. New homes that cost $300,000 or more do not qualify for a QST rebate.
Applying for the rebate
Your application must be filed with Revenu Quebec within two years after the date on which ownership of the property was transferred to you.
However, if you purchase land and a new home at the same time from a builder under a single sales contract, with the intention of using the property as your primary place of residence, the builder will often credit the rebate to you directly, deducting the refund amount from the purchase price. This is the case for buyers of a condominium at L'Avenue condos in Montreal. Already sold at over 85 %, there are still units available in the L'Avenue condominium project that qualify for the GST/QST New Housing Rebate.
GST/QST rebates for investment condos
Investors may also eligible for a tax rebate on the purchase of a new home. If you purchase a new condo in Quebec, Canada with the intention of using it as a rental property, you may be eligible for the GST/QST New Residential Rental Property Rebate (NRRP).
In order to qualify for the NRRP Rebate, the first people to occupy the new condo must be your tenants. The rebate is only available to buyers of new homes that will be rented as a primary place of residence for a period of at least one year. Therefore, it is important to have your tenants enter into a lease for a period of no less than one year.
Even if you are a non-resident investor, you may still be eligible for the NRRP Rebate if the condo is rented to a third-party for use as a principal residence.
Applying for the NRRP rebate
In the case of income property condos, the builder cannot deduct the rebate directly from the purchase price. Instead, the buyer will need to pay the taxes at the time of the purchase of the condo and then independently apply for the rebate. The application must be filed within two years after the date on which ownership of the property was transferred to you. Only one rebate application may be submitted for each residential unit.
The NRRP GST rebate
Just like the New Housing Rebate, the federal portion of the NRRP rebate is calculated at 36% of the GST paid on the purchase price of the condo, to a maximum of $6,300. The refund amount is progressively reduced when the price of the new condo exceeds $350,000, but is less than $450,000, and there is no NRRP GST rebate available where the purchase price is $450,000 or more.
The NRRP QST rebate
The provincial NRRP tax rebate is equal to approximately 50% of the total QST paid on the purchase price of the property. However, for rental properties, the maximum QST refund amount is limited to $7,182. The rebate is progressively reduced when the price of the condo exceeds $200,000, but is less than $225,000. New homes valued at $225,000 or more do not qualify for the NRRP QST rebate.
For more information about the GST/QST New Housing Rebate and the New Residential Rental Property Rebate, or for access to the rebate application forms, you can visit the Revenu Quebec website.