GST/HST information for builders of housing

The GST/HST generally applies to the sale of new housing and substantially renovated housing by a builder.

Builders collect the GST/HST payable on the taxable sale of housing if the buyer of the housing is an individual. Otherwise, the GST/HST registration status of the buyer determines who collects and remits the GST/HST.

Builders who are registrants may be able to claim input tax credits (ITCs) to recover the GST/HST paid on the goods and services used in the construction or substantial renovation of the housing.

On this page:

• Self-supply rules
• Building a home for someone
• Renovations (other than substantial renovations)
• Filing your GST/HST returns
• Paying or crediting a purchaser for the new housing rebate

Self-supply rules

In special situations, builders have to calculate and pay the GST/HST on the fair market value of a housing they constructed or substantially renovated.

You are considered to have sold and at once bought back (self-supplied) housing (such as a house or a multiple-unit residential complex) if:

• you are a builder, and you claimed ITCs during the construction or substantial renovation of the housing; and
• you rent the property to an individual as their place of residence or you occupy the property as your own place of residence.

In this case, you will need to calculate the GST/HST payable at the later of:

• the time of substantial completion of the building; or
• when the first unit is leased to an individual, or occupied by yourself.

In the case of subsidized housing, the above rules apply with the exception that the GST/HST you have to remit is based on the greater of:

• the GST/HST on the fair market value of the building; and
• the tax paid on the acquisition of the land, on the construction of the building, and on any improvement to the property.

Where you rent the property to an individual as their place of residence, you may qualify for a new residential rental property rebate.

The above self-supply rules also apply to residential condominium sales agreements that are terminated after the buyer has occupied the unit and before you register the condominium. You pay the GST/HST on the fair market value of the unit when the agreement terminates.

For more information, see GST/HST Memorandum 19.2.3, Residential Real Property – Deemed Supplies.

Building a home for someone

If you are hired by someone to build a house on land they own or lease, you must charge them GST/HST on the labour and material you provide when building the house. Your client may qualify for the GST/HST new housing rebate for the GST/HST paid on labour and materials, but they must apply for the rebate. You cannot apply for it on their behalf.

A provincial new housing rebate may also be available to your client if the house is located in Ontario or in British Columbia (where the tax became payable before April 1, 2013). For more information, see Provincial new housing rebate in Ontario or Provincial new housing rebate in British Columbia.

Renovations (other than substantial renovations)

If you are a contractor or a real estate developer and you renovate a residential complex that you bought in the course of your business, special rules apply where the renovation is not considered to be a substantial renovation.

In this case, you have to remit the GST/HST on certain untaxed costs (other than financial services), such as employee labour costs involved in renovating the housing. You calculate the GST/HST based on the value of the amount paid or payable on such untaxed costs. This rule would not apply to other input costs (for example, material or contracted services) on which GST/HST has already been paid.

The sale or the lease of the property after the non-substantial renovation is generally exempt from GST/HST. You are not able to claim ITCs to recover GST/HST paid on the goods and services used in the renovation of the housing. The buyer cannot claim the GST/HST new housing rebate on the sale.

Filing your GST/HST returns

Builders must use GST/HST NETFILE to file their returns for these reporting periods where they have paid or credited the amount of the rebate to the buyer. Builders may also be required to electronically file their GST/HST returns for other reasons. For more information, see Mandatory electronic filing of the GST/HST return (GST34).

Paying or crediting a purchaser for the new housing rebate

If you pay or credit the purchaser with the amount of the new housing rebate, you have to make sure that the purchaser meets all of the eligibility conditions for the rebate, before you pay or credit the purchaser with the amount. For example, the house must be intended to be, on purchase, the primary place of residence for the individual or their relation.

If you are required to file your GST/HST returns electronically, you must send us the rebate application by mail immediately after you file your GST/HST return for the reporting period in which the amount of the rebate was paid or credited to the buyer.

Related topics

• Timing rules for determining when the GST/HST becomes payable on the supply of real property
• Collecting and remitting GST/HST when you sell or purchase taxable real property
• Substantial renovations, conversions, and major additions
• Exempt sales of residential property and vacant land
• GST/HST housing rebates

Date modified:

2015-04-28