Sales tax on a pen is one thing, but on a home purchase, it can easily amount to tens of thousands of dollars. When dealing with real estate transactions, GST is always a relevant consideration. Fortunately with the majority (not all) of resale homes/condos in urban areas, GST doesn't normally apply, as those types of properties are considered exempt. There can be cases of rural properties, especially where farms operated or businesses, that gst may apply. When buying a new build property, gst does apply; however, when your home is under 450000.00 you get a bit of a rebate. The closer you are to that price, the smaller the rebate gets. What practically speaking happens is you assign the rebate to the builder in most cases and then they reduce the price accordingly. Sometimes the builder makes you pay the GST and you have to get it from the CRA directly. As well, if you buy the property as a rental property, it is a bit more of a convuluted process to get the rebate, but it may be possible to get it. The most interesting and tricky GST considerations often are associated with bare land. If the land is capital property used for business or sold in the course of a business or created by subdividing another parcel into more than two parts, then GST is likely applicable. One way around paying GST immediately to the seller, if it is in fact applicable, is to get a GST Registration Number. Buyers will also sign a GST indemnity meaning that they will be responsible for reporting the gst to the CRA themselves and protecting the seller from any liability if they don't properly report/remit to the CRA.
Any time I deal with rural property or bare land, I always recommend that clients consult their accountant to confirm the GST status so that we can present opinion this to the other party + ensure that everyone is on board.
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