In January, a number of our clients are closing on new construction rental properties, mainly in Cambridge Ontario’s Maple Grove community (355 Fisher Mills Road, north of 401, at Hespeller Rd). A few of these clients are new Real Estate Investors, and were not aware that you could apply for a GST Residential Rental Property Rebate (link goes to the Revenue Canada site hosting the rebate application).
Most people know that there is no GST payable on residential resale properties, and that there are rebates when buying new construction to live in, but not that they may be eligible to claim a GST/HST rebate when buy a newly constructed rental property, or “substantially renovate” a residential rental. The property must be under $350,000 , and there is a partial rebate available if the fair market value falls between $350,000 and $450,000
From the Governement’s form:
“Use this form if you purchased or built a new residential rental property, substantially renovated a residential rental property, made an addition to a multiple unit
residential complex, converted a commercial property into a residential rental property, or leased land for residential purposes.
You have to send appropriate documents with your application (we accept photocopies). See the guide RC4231, GST/HST New Residential Rental Property
Rebate, for details. We may audit your rebate claim.”
You can find the form here: GST Residential Rental Property Rebate
Related posts:
- Investing in New Construction Real Estate in Waterloo Region
- What Student Rental apartment buildings can you buy in Waterloo?
- How profitable can investing in Kitchener Waterloo Real Estate be?
- Property Management for KW investment property
- Investment Property in Cambridge Ontario Sells for BIG Bucks
Benjamin,
Interesting post.
I have always found investing in new construction to be very interesting.
2 of my purchases have been new construction and the remainder have been resale.
I have a friend who invests exclusively in new construction. She often buys wholesale from the builder. As the property is being constructed, the marketing efforts are in full swing by her Realtor. Her objective is the have the property rented out as close to the closing date as possible.
To be honest, I have always been slightly hesitant of this strategy versus, buying resale. When I buy resale, I know, and can crunch all of my numbers today, in order to make sure the property cash flows.
My hesitation with buying exclusively new construction is that I do not know what some of the market rents are going to be in a new area or subdivision. As a result, I find it difficult to predict what, if any positive monthly cash flow I will have on the property, because I do not know the market rents.
Regards,
Neil.