GST on house flipping

Tax Topics
1

I am looking for some info on GST being charged on house flipping. Anyone familiar with the rules around this or who has an actual ruling would be appreciated. In this case someone went into a deal with a house owner to substantially renovate a house (Personal residence) and sell for a profit. They turned a loss on the deal. I am wondering if GST was supposed to be collected on the disposal.

Thanks.

2

GST on real estate is complex. The rules are not the same as “normal” GST. Often the purchaser must remit the GST directly to CRA - that is, GST should NOT be charged by the seller. But there are exceptions to that rule as well.

https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/19-1/real-property-gst-hst.html

https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/19-2-1/residential-real-property-sales.html

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3

You could check out Frank on LinkedIn, he has a GST consulting firm.
Frank D’Agnillo | LinkedIn

4

owner built substantive renovated house is subject to GST but the buyer can claim GST rebate and pass that to the seller to offset the GST burden.

from CRA website:

Owner-built houses

You may be entitled to claim a GST/HST new housing rebate for an owner-built house if you:

  • built, or engaged someone else to build, a house on land that you already owned or leased
  • substantially renovated, or engaged someone else to substantially renovate, your existing house (at least 90% of the interior of the existing house must be removed or replaced to be a substantial renovation)
  • renovated, or engaged someone else to renovate, your existing house and built, or engaged someone else to build, a major addition to your house, to the extent that this is viewed as a newly built house (for example, the addition of a full second story to an existing bungalow). Adding a sun porch, sun room, family room, or bedroom by itself is not a major addition
  • converted a non-residential property into your house
  • purchased a new or substantially renovated mobile home or a new floating home from a builder of the home (this includes the manufacturer or vendor of the home) or you or someone you hired substantially renovated such a home

For a mobile or a floating home, you can claim either the owner-built new housing rebate or the new housing rebate for a house purchased from a builder, mentioned below.