Saturday, April 28, 2012

BEWARE! HST rebates on your Toronto condo Purchase

Yes,  the real estate condo market is HOT!
Yes, You can flip your unit for immediate profit!
Yes, You can rent your unit!

Yes, Revenue Canada;  affectionately referred to as CRA  is made aware of the transaction. HOW you ask?   You pay Land Transfer Tax on your purchase; Tarion Warranties apply.  Even in a Flip there are disclosures.

You can sell your unit and claim the [HST] tax on closing or if you rent your unit and provide a copy of the lease; preferably you will pay the tax and request a rebate a year later.  Personally, people try to slip through.  CRA is clever too!
Many investors who bought new homes or condominiums several years ago from plans are trying to take advantage of the hot real estate market by selling without moving in. However, these same investors signed papers with the builder promising that they would move in, so the builder applied for HST rebates on their behalf. Now CRA wants the HST rebate back with interest. That can be as much as $30,000. 
I’ve heard plenty of stories from realtors about investor clients receiving demand letters from CRA about the HST.
The lesson is that buyers must understand their obligations if they intend to apply for any HST rebate on a new home or condominium. Either you must move into the home as your primary residence on closing, in which event you can immediately apply for the full rebate, or you must rent it out for at least one year and then apply for the rebate. If you are intending to immediately re-sell your home without moving in, then just pay the full HST amount when you buy the home from the builder, and don’t apply for any rebate.
There!  Now you have a definitive answer from Mark Weisleder, a real estate lawyer.   So when a REALTOR tells you to beware, that Revenue Canada is watching, we are not using scare tactics or fear.  We just know better.   Thats why you use an  experienced real estate agent.

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1 comment:

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