HST New Housing Rebate - Rental Property v. Primary Place of Residence
In a previous post in our Tax News section, I discussed the Tax Court of Canada’s decision in Wong v. The Queen which stood for the proposition that intent for purposes of the HST New Housing Rebate was determined at the time of entering the purchase agreement. The CRA will generally evaluate a taxpayer’s intent at the time of closing and the conduct thereafter.
In a decision rendered on September 30th 2013, the Tax Court in Napoli v. The Queen held that the taxpayer was not entitled to the HST New Housing Rebate for a home purchased in Ontario because the taxpayer did not purchase the property with the intention to occupy it as his, or a relation’s, primarily place of residence. Rather, the taxpayer rented the property to an unrelated third party.
While he initially purchased the property to use as his primary place of residence, things changed and it was decided that he would rent it – allegedly to his parents. Ultimately, however, it was not in fact rented to his parents. In the alternative, the taxpayer tried to claim the HST New Residential Rental Rebate but the Court noted that it was statue barred since the taxpayer missed the deadline for applying for that rebate.
Paris, J. disallowed the HST New Housing Rebate in its entirety.
HST Rebate Tip
Where a new home is purchased initially as a primary place of residence but later it is decided to lease, the requirements to qualify as a HST New Housing Rebate may no longer be met. Rather than risk having the HST rebate claim disallowed, a better approach may be to apply for an HST New Residential Rental Property Rebate – which in Ontario could provide an HST rebate up to $24,000. There is, however, a 2 year limitation period.
If you have been reassessed and disallowed the HST New Housing Rebate by the CRA, it does not necessarily mean that you do not qualify. You can contact us to learn more.
TaxChambers LLP is collaborating with Andersen Global in Canada.