Rebates can save you a substantial amount of money on your real estate purchases by lowering your overall tax liability.
There are two federal rebates that Alberta property purchasers can benefit from: the GST/HST New Housing Rebate and the GST/HST New Residential Rental Property Rebate.
Here’s your complete guide to these rebates, as well as to other rebates and incentives which you can claim as a new landlord in Alberta.
What is the NRRP rebate?
The NRRP Rebate is for property investors and landlords who rent out newly purchased real estate. It’s a rebate on your harmonized sales tax (HST) that you would have paid at closing, as well as on the Goods and Services Tax (GST) paid at closing.
Does Alberta offer a Provincial New Residential Rental Property Rebate?
Alberta only offers the federal rebates.
However, Alberta does offer a few other grants, loans, and programs that may apply to your situation. For example, the Residential Rehabilitation Assistance Program is open to First Nations members owning residential properties that want to create affordable, self-contained rental accommodations such as mother-in-law suites. This offers a forgivable loan of $60,000 per unit.
Another example would be the CMHC Green Home rebate, for those who buy, build, or renovate energy-efficient homes using CMHC-insured financing. This is a 15% rebate for building a home to Energy Star standards or up to 25% for building them to R-2000 standards.
Certain Alberta municipalities also offer property tax incentives worth investigating. Ask your real estate attorney which ones might apply to you.
We urge our clients to thoroughly investigate every rebate, grant, or forgivable loan that might apply to their unique situation.
What is the New Housing Rebate?
The New Housing Rebate is a rebate offered on the GST paid on a new construction home or substantially renovated home. The home must be built for you or for a relation which may include parents, siblings, children, or other descendents, as well as your spouse, common-law partner, former spouse, or former common-law partner. It must be the primary place of residence for you or one of these individuals.
As of April 20, 2021 only one owner on the home must use the home as a primary residence. For example, a parent can buy a home for their child and make the child a co-owner on the home. The child can live in the home and the parent can live elsewhere without losing access to the new housing rebate.
Who is eligible for the NRRP Rebate?
To be eligible for the NRRP Rebate you must:
- Be a landlord.
- Purchase a newly constructed or substantially renovated residential rental property, or a make an addition to a multi-unit rental complex such as an apartment complex.
- You may purchase a house, a condo, a duplex, a triplex, a fourplex, or an apartment home.
- You are a builder who had to account for GST/HST under self-supply rules because you sold a residential unit to an individual and then leased them the land.
- You rented a residential lot or a site in a residential trailer park.
- The fair market value on the unit was less than $450,000 when the tax was payable on the purchase or self-supply of the property.
- You intend the property to be a long-term use rental, not an Airbnb or a VRBO.
Be careful. If you claim the NRRP rebate and then turn around and sell the property within one year of its occupation as a place of residence you will have to repay it. You will also have to repay it if you rent the property out to a relative.
You cannot claim the NRRP if you are claiming a New Housing Rebate.
Who is eligible for the New Housing rebate?
You must buy or build a new construction home, pay GST taxes, and at least one owner of the home must use that home as a primary residence. The home must be purchased either for your use or for use by a relation.
How to Apply for the HST New Residential Rental Property Rebate
Each of these forms will ask you to submit relevant documents to support your rebate application. One of these forms will always be the lease agreement issued to your new tenant, and one will always be a copy of the purchase contract.
Pay close attention to the requirements, or ask your accountant to help you.
How to Apply for the New Housing Rebate
Fill out Form GST191 or GST191-WS. You may also need to fill out form RC7191-ON. You will usually have to submit proof of occupancy. You can learn more by going through this CSA guide.
How do you calculate the Provincial New Residential Rental Property Rebate amount?
The NRRP is the amount of GST/HST paid multiplied by 36%, to a maximum of $6,300.
How do you calculate the New Housing Rebate?
Like the NRRP, the GST/HST New Housing Rebate is equal to the amount of tax paid multiplied by 36% to a maximum of $6300.
When do you claim a New Residential Rental Property Rebate?
You claim the NRRP when you file your tax return for the year. The same is true for the New Housing Rebate, if that is the one you are eligible for. Remember, you may only claim one, and you may only claim the one that best applies to your situation.
How do you get your rebate refunds?
The rebate factors into your overall tax liability. It may simply lower your taxes due, or it may result in your getting a refund. Either way you will realize the benefits of the rebate at tax time. You will not receive a separate, specific rebate check.
Do you have questions about which rebates and incentives might apply to you, how to claim them, or whether you are eligible? Reach out to the team here at Edmonton Real Estate Law! Just call (780) 488-4152 to set up an appointment today.