New Residential Rental Property Rebate(NRRP)
Have you bought a newly built house for rent in the past 2 years? You might be eligible for a GST/HST New residential rental property rebate!
Most Ontario residents are aware of the principal residence rebate on GST/HST for those new homes that have been purchased as primary residences; that rebate is easy to get as the builder or developer will typically apply for the GST/HST rebate for you, and you see the deduction in the final statement of adjustment to the purchase price.
Rebates for residential rental properties differ vastly from rebates for new homes bought for a primary residence. When you purchase a new residential property to rent out, the home builder or condo developer cannot apply for the new home GST/HST rebate on your behalf. You can directly apply your rebate application as soon as the deal is closed and a tenant has been signed. This is called the New Residential Rental Property Rebate (NRRP).
Let’s see some of the highlights of NRRP :
Who is eligible for the New Residential Rental Property Rebate (NRRP)?
An individual can apply for NRRP Rebate if the following conditions are satisfied:
- You have purchased a newly built condominium or residential property and
- You have at least a one-year lease agreement for letting out the property to a tenant
Documents needed to apply for NRRP rebate:
- Copy of purchase and sales agreement
- Copy of statement of adjustments
- Copy of 1-year lease agreement
What is the maximum amount of eligible Rebate for New Residential Rented Property?
As a buyer, you are eligible for a Federal rebate and an Ontario rebate on the provincial part of the HST you pay. To claim the same, you need to file two separate forms.
The federal rebate you can claim for the GST portion is 36% of the GST tax amount up to a maximum of $6,300, which is GST payable on a $3,50,000 home. As the value of the home increases from $350,000 to $450,000, the rebate reduces proportionately and disappears entirely once the home price exceeds $450,000.
The Ontario rebate is equal to 75% of the provincial part of the HST paid, up to a maximum rebate of $24,000. In other words, if the value of the home exceeds $400,000, you should qualify for the maximum rebate of $24,000.
Change of intention of Buyer
While getting the purchase agreement signed, builders and developers asked the purchaser about the intention of using the property. Sometimes purchasers buy the property initially for a primary residence but do not end up doing so and rent it out. They, in that case, receive credit from the government for GST/HST, which they are ideally not eligible for since the property is not used for a primary residence. This may be subject to fines and penalties by CRA. In that case, the purchasers needed to apply for the right rebate, which is the New Residential Rental Property Rebate (NRRP).
Since CRA asks for proper documentation, it is always advisable to take the help of a tax consultant to file the correct claim for New Residential Rental Property Rebate (NRRP).
We at Rav Bhatia CPA Professional Corporation provide a hassle-free facility for our clients for all their filing needs with CRA.
Book a consultation with us today!