GST on New Homes and Assignments in British Columbia: Who Pays, Rebates, and Key Considerations

Understand when GST applies to new homes and presales in British Columbia, how to calculate GST, and how the GST New Housing Rebate and Rental Rebate work. Learn key rules for assignments, investor considerations, and eligibility requirements.

Purchasing a newly built home or a presale property in British Columbia often involves Goods and Services Tax (GST). GST applies to most brand-new residential properties, significant renovations, and many presale contracts. For buyers and investors, understanding when GST is payable—and whether a rebate is available—is critical for budgeting and avoiding unexpected closing costs.

This guide explains GST on new homes, GST on assignment sales, and the rules surrounding the GST New Housing Rebate and the GST New Residential Rental Property Rebate. It also highlights common traps and misconceptions that buyers should be aware of.

When GST Applies in British Columbia

GST (5%) typically applies to:

  • Newly constructed or substantially renovated homes
  • Pre-construction presale contracts
  • Newly built detached houses, townhomes, and condos
  • Owner-built homes
  • Newly built laneway houses or secondary suites (depending on intent and use)
  • Assignment transactions where profit is earned

GST does not apply to most resale homes, unless CRA considers the property “substantially renovated.”

GST on New Homes: How It Is Calculated

GST is calculated as:

Purchase Price × 5%

Example:
Home price: $800,000
GST at 5%: $40,000

Most presale prices are advertised before GST. Buyers must confirm whether GST is included because contract wording varies by developer.

The GST New Housing Rebate (For Owner-Occupiers)

The GST New Housing Rebate offers relief to buyers who intend to live in the newly built home as their primary residence.

Rebate Amount

  • 36% of the GST paid
  • Maximum rebate: $6,300
  • Full rebate if purchase price is $350,000 or less
  • Phased out between $350,000 and $450,000
  • No federal rebate for homes above $450,000

Note: These thresholds are outdated relative to BC’s current market, meaning many buyers will not qualify.

Eligibility Requirements

To qualify, the buyer must:

  • Purchase a new or substantially renovated home
  • Use it as a primary residence
  • Move in within a reasonable period
  • Apply for the rebate within two years of completion

Occupancy Rules

To keep the rebate:

  • Buyer (or qualifying family) must occupy the property as a primary residence
  • Must generally remain for at least 12 months
    If CRA determines a flip or rental occurred shortly after occupancy, repayment may be required.

GST New Residential Rental Property Rebate (For Investors)

Investors may qualify for a different rebate if the newly built home is rented long-term.

Eligibility Requirements

  • Buyer does not plan to live in the property
  • Must secure a long-term tenant immediately after completion
  • Short-term rentals do not qualify (e.g., Airbnb)
  • A signed lease agreement is required

Rebate Amount

  • Same structure as the owner-occupier program:
    36% rebate, up to $6,300
  • Same purchase price thresholds and phase-out

Key Distinction

You cannot apply for both the owner-occupier and rental rebates. Eligibility depends entirely on intended use at completion.

GST on Assignment Sales

Assignments can trigger GST in two ways:

1) GST on the underlying new home

GST applies as if the original buyer completed the purchase.

2) GST on the assignment profit (the “lift”)

GST applies to the profit portion.
Example:
Original price: $700,000
Assignment price: $800,000
Profit (lift): $100,000 → GST owed on $100,000

If the assignment is at a loss, GST is generally not charged on the negative portion.

Who remits GST?

Usually the assignor, unless the contract or CRA rules dictate otherwise.

Critical Note: Assignment paperwork must state whether the price is GST-inclusive or exclusive, as misunderstandings are common.

Special Situations Where GST May Apply

Laneway homes / coach houses

Usually subject to GST. A rental rebate may apply for long-term tenancy.

New legal suites

GST may apply to the suite portion depending on construction intent. Tax advice is strongly recommended.

Substantially renovated homes

If CRA determines the home meets its “90%+ renovated” definition, GST may apply even though the property appears resale.

Case Study: Burnaby Presale Buyer

A buyer purchases a presale condo in Burnaby for $620,000, intending to live in it. GST ($31,000) applies, and because the purchase price exceeds $450,000, no owner-occupier rebate is available.

Another buyer purchases a similar unit but plans to rent it long-term. They secure a tenant at completion and qualify for the New Residential Rental Property Rebate, reducing their overall GST cost.

Outcome: Both units are priced the same, but only the investor qualifies for a rebate.

Frequently Asked Questions

1) Can I keep the rebate if I move out within a year?

Generally no. CRA may require repayment unless the move-out is due to circumstances such as job relocation, illness, or family changes. CRA assesses intent using records such as utility bills, address history, and lease agreements.

2) Can I apply for a rebate if I build my own home?

Yes. The Owner-Built Home Rebate is available for primary residences. Buyers must keep all GST invoices from contractors and suppliers. Deadlines are strict; professional tax advice is recommended.

3) Do investors always qualify for the rental rebate?

No. The property must be leased immediately on a long-term basis, and proof of tenancy is required. Short-term rentals do not qualify.

4) How do I confirm if GST is included in a presale price?

The contract must state this clearly. Some developers advertise prices before GST; others include it. Buyers should confirm during contract review and through their legal advisor.

5) Is GST payable on assignment deposits?

No—only on the profit portion. Deposit transfers are not taxable.

6) Do foreign buyers pay more GST?

No. GST is federal and uniform.
However, foreign buyers may face additional BC taxes, depending on current regulations.

Helpful Resources

Important Note

This information is provided as a general guide. It does not replace individualized legal, accounting, or mortgage advice. Individuals should consult their professional advisors before making real estate decisions.