GST and Your Real Estate Transaction

It's recently come to my attention that payable GST can prove to be a very grey area in our Real Estate market.  Here are a few facts I have found (following except taken from CRA website)

Sale of Vacant Land by Individuals

In this document, "taxable" means subject to the GST and "exempt" means not subject to the GST.

Where the sale of vacant land includes a residence or house, the sale is viewed as two separate sales:

i)   the portion that includes the house plus the land that is necessary for the use and enjoyment of the house; and

ii)  the remaining portion of land.

The info sheet applies to the sale of the remaining vacant land.  Sales of used house are usually exempt although there are circumstances when they may be taxable.  For additional information on sales of used homes refer to GST/HST info sheet, Sales by Individuals of Owner-Occupied Homes and GST/HST Memorandum 19.2.1, Residential Real Property Sales.

Sales of farmland are usually taxable although there are limited curcumstances when they may be exempt.  For additional information on farmland refer to GST/HST infor sheet, Sales of Farmlands by Individuals.

Most sales of vacant land by individuals are exempt.  Examples of exempt sales are:

- the sale of land that had been kept for personal use; or

- the sale to a relative for their personal use of a parcel of land created by subdividing another parcel.

However, there are situations when sale sof land may be taxable.  Examples of taxable sales include:

-the sale of land that is capital property that had been used primarily in a business

-the sale of land in the course of a business; or

-the sale of a parcel of land created by subdividing another parcel into more than two parts.

Because there are so many exeptions and unique circumstances involved, it is always best to have a  discussion with your accountant or lawyer regarding payable GST in Real Estate, to ensure that you are properly informed and protected during your real estate transaction.

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