If you are doing renovations on your home in British Columbia, you may be wondering if the Substantial Renovation Gst is applicable to you. It’s important to understand that the GST/HST is applied to the fair market value of the property. For example, if you are remodeling your kitchen and the fair market value of the home is $600, you will be charged a tax of $85. In addition to the GST/HST, there are also tax rebates available to you.
Self-supply rules apply to the construction of additions to residential complexes, and to changes in use of a complex. These rules are part of Canada‘s Excise Tax Act and are intended to level the playing field between builders and non-builders. In the case of an addition to a residential complex, the builder must self-assess the tax on the fair market value of the building. If the builder sells the complex without an addition, it is treated as a used residential complex and is exempt from GST/HST.
There are three major exceptions to the self-supply rules. The first exception is for the conversion of a non-residential real property into a residential complex. An exception is also provided for a corporation that leases out residential units to individuals. Another exception is for public colleges and universities.
A third exception is for the sale of a residential complex that has been substantially renovated. A substantial renovation is a change in the use of the property to one that is not residential. It may be undertaken by a religious community or a person who carries out renovations themselves.
When an addition is built to a multiple unit residential complex, the builder must self-assess a portion of the tax on the fair market value of the land on which the addition is located. Substantial completion is deemed to be when 90% or more of the units in the complex have been occupied.
Similarly, self-supply rules do not apply to the sale of an addition to a residential complex before it is occupied by the first individual. Substantial renovations are not tax-exempt, but the builder can recoup the tax on the last acquisition by claiming an input tax credit.
Lastly, self-supply rules do not apply if the builder uses the residential complex for personal purposes or for non-residential purposes. For example, if the builder is a private elementary or secondary school authority or a university, the complex is not a residential complex. Communal organizations, including religious communities, are also not deemed to be residential complexes under the self-supply rules.
Require receipts for renovation work under the Home Renovation Tax Rebate
If you are considering renovating your home, there are some federal and provincial tax credits that might help you save money. These credits are designed to help Canadian families with their renovation projects. However, you need to know what you are getting into.
Several programs are available, each with its own requirements and timeframe. You may also be eligible for a grant from both the federal and provincial governments. It is also important to consult a financial advisor or an accountant before you start any project.
The federal government offers a new housing rebate program that is designed to help people recover the GST and HST they paid on new homes. Those who qualify for this program can receive a rebate on a substantial home renovation.
In addition, Canada has a Home Accessibility Tax Credit (HATC) for eligible Canadians with disabilities. This credit reduces the cost of renovating your home to make it more accessible. While the HATC isn’t refundable, it can be worth up to $10,000.
Generally, you can only claim this tax credit if you are 65 years or older and you own or rent your home. However, you can waive this requirement if you are living with a senior.
There are many other tax benefits, including the ability to deduct the costs of building materials, permits, and professional labour. But you should be aware that not all renovation costs are deductible.
If you are planning a major renovation, it might be a good idea to talk to an expert first. This is because you need to be sure you are getting the most out of your renovation. For example, if you plan to replace the heating and cooling systems in your home, you can deduct some of the cost, but not all of it. Also, you should get an estimate from a contractor to find out how much a renovation might cost.
One of the best ways to make your home more comfortable and convenient is to renovate it. You can even do it with a loan!
GST/HST payable on the fair market value of the property
If you renovate your existing home, you might qualify for a new housing rebate. This is a federal and provincial incentive that will help cover some of the GST/HST you paid during construction. You must claim the rebate within two years after the substantial renovation.
In addition to the new housing rebate, you may also qualify for a builder-landlord rebate. The government has published a guide to explain the process. It includes information on what constitutes a substantial renovation, timeframes for qualifying, and the relevant timeframes for applying.
The New Housing Rebate is only applicable to homeowners who meet the criteria. In order to qualify for the rebate, your house must have a fair market value of $450,000 or more. That figure is progressively reduced as your purchase price increases.
For example, your house might qualify for a $24,000 rebate. However, you might not receive that rebate. The maximum rebate you receive is only a bit more than half that amount.
The CRA has provided a website where you can complete an assessment form. This form will calculate your eligibility for the new housing rebate. Once you know your eligibility, you can fill out a form to claim the rebate. A maximum of $36,000 will be reimbursed. Your rebate will be clawed back over a period of time, but you will eventually receive a check for up to 50 percent of the QST you paid.
The Tax Harmonization Notice also outlines other information for homeowners. For instance, you can use ITCs to recover GST/HST on land acquisitions and taxable development costs. But you must have a good idea of what your property is used for to claim the best possible rebate.
Generally, a new home is treated as a substantial renovation for these purposes. As mentioned above, the HST will apply on your purchases of services and real estate. Nevertheless, there are some exemptions to this rule.
Purchasing a mobile or floating home is a good way to avoid the levy. However, you must be careful when claiming your property as a primary residence. Using a calculation that is not correct can result in a significant assessment.
Time it takes to get a rebate
A substantial renovation can take up to two years to claim a GST rebate in BC. Whether you are planning to renovate your existing house or buy a new one, you may be eligible for a federal or provincial tax rebate. There are different criteria you need to meet to qualify for a rebate.
The federal government’s GST/HST New Housing Rebate program is designed to help individuals make significant improvements to their homes. Individuals can apply for the rebate on renovations that replace 90 percent of the interior of an existing home or on the addition of a large section of housing to an existing structure.
In order to claim a rebate, you must be the owner of the property or a close family member. The property must be your primary residence. If you are 65 or older, you can waive the requirement to live in your home.
Depending on the circumstances, a person may also be able to claim a rebate on a leased property. In most cases, a leased property will qualify for a rebate if it has been occupied for more than 20 years.
During the two-year period following the completion of the project, all documents required for a claim should be kept. These include any paid invoices or receipts. They should be stored in a secure place. It is important to keep the originals instead of copies. You can also use input tax credits for all related costs.
If you are a landlord, you can claim HST on your renovations as a business expense. However, you cannot claim a rebate on a second home or a vacation property. To qualify, the property must have been occupied for at least three months prior to the date the renovations began. Exceptions may apply for mobile or co-operative units.
While a substantial renovation can take up to two years to complete, you should not delay in claiming your rebate. The process can be complicated, but the right attorney can help you through it. Your lawyer can collect the necessary documentation and file your claim.
Among many other things, David A. Grantham is a contributing author to UmassExtension West Vancouver Blo. He is a renowned expert on real estate in BC.
Born in North Vancouver, Louisiana, Dr. Grantham grew up in Lower Lonsdale. He then went on to complete his business degree at the University British Columbia. As of this writing, Grantham has completed over 100 projects, including the development of a high rise building in Vancouver.
He is a husband, father, son, brother, and friend. He was a dedicated outdoorsman and enjoyed sports such as hunting, fishing, scuba diving, and snow skiing. His wife, Alison Grantham, and their two daughters survived him. He is survived by his wife Alison Martin Grantham and two daughters.