Enhanced GST Rental Rebate for the Construction of Rental Housing

Introduction

If you are in the real estate business, either a developer or contractor, you’ve certainly heard of the 36% GST Rental Rebate for new rental housing. Good news, following the Prime Minister Justin Trudeau’s announcement last September 14, the removal of GST for certain new rental housing constructions is now a reality!

Qualifying new constructions

If you are planning to build new purpose-built rental housing, this rebate is for you. The new constructions that qualify are:

Apartment buildings;
Student housing; and
Senior residences;

that qualify for the existing 36% GST Rental Rebate, and are buildings with at least:

(i) four private apartments¹ or 10 private rooms²; AND

(ii) 90 % of residential units designated for rentals of over thirty (30) days rent.

You might also qualify for this rebate if you are planning to convert existing non-residential real estate, such as an office building, into a residential complex, or if you are a public service body_³.

Effect

This enhancement increases the GST Rental Rebate from 36 per cent to 100 per cent and removes the existing GST Rental Rebate phase-out thresholds.

Coming into Force

The Enhanced GST Rental Rebate applies to projects that begin construction on or after September 14, 2023, and on or before December 31, 2030, and complete construction by December 31, 2035. Retroactive application is not possible.

The Enhanced Rental Rebate does not apply to renovations, even substantial, made to existing residential complexes since the federal government’s goal is to create new accommodations.

It is not intended for individually-owned condominium units, single-unit housing, duplexes, triplexes, housing co-ops, and owned houses situated on leased land and sites in residential trailer parks. However, such housing can continue to qualify for the existing 36 % GST Rental Rebate if the existing conditions are met.

Result

Qualifying rental units will be relieved of GST, which can represent considerable costs in a construction budget.

Considering that this new measure is not yet available in text form, we will remain on the lookout for new details once it is published.

Do not hesitate to contact our experienced team in real estate taxation for more information at fiscalite@cainlamarre.ca.

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[1] Units with a private kitchen, bathroom and living area.

[2] A 10-unit residence for students, seniors, or people with disabilities.

[3] Refers to a non-profit organization, charity, municipality, education or hospital administration, public college or university.