DAVID M. SIMON

BARRISTER & SOLICITOR

268 1440 Garden Pl.                                                           Tel/fax: (604) 943-4045

Delta, B.C.  V4M 3Z2                                         Email: david@davidsimonlawyer.com

February 17 2016.

Dear Sir or Madam,

This month's newsletter is a refresher on GST in real estate transactions.  I am just highlighting some of the basic items that will be helpful if your client has some questions. You can find more information on the CRA’s website.

Remember that it is not your responsibility to advise your clients as to GST matters. You do not have the expertise and giving wrong advice guarantees you a lawsuit from your client. If they ask you anything that you are even slightly not sure of tell them to speak to an accountant or lawyer who is familiar with GST matters.

GTS is charged on commercial properties and on new residential properties. If the property is subject to GST and the agreement does not say about GST, i.e.  whether it  is included in the price or is extra, then the rule is that it is in addition to the price.

Assignment fees in flip situations are subject to GST. So make sure the assignment contract clearly says who pays it otherwise the assignee is stuck paying it.

GST is not charged on used residential properties. However be wary of sellers who have very new houses and say they have been lived in and are not therefore subject to GST. Many of these sellers are trying to dupe buyers. If later the CRA determines that GST is payable the buyer will have to pay it and good luck trying to sue the seller for misrepresentation. And there seems to be this “idea” amongst some agents that if a property is over a year old there is no GST on it. That is not true. Always tell your client to get proper advice from an accountant or lawyer.

There is a limited rebate of GST for new home buyers, whether first time buyers or not, for properties worth $350,000 or less. The rebate is 36% of the GST paid.  For properties between $350,000 and $450,000 the rebate decreases exponentially with the price.

There is also a GST rebate for new residential rental properties. Similar price limits apply and you must have it rented before you can apply for the rebate.  

Yours truly

David Simon

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Residential & Commercial
House, Condo & Townhome