- CRA states that changing the title direction at closing is considered a real estate transaction for GST/HST purposes
- Two individuals initially agreed to buy pre-construction condos separately, one for personal use and one for rental
- They now plan to co-own both units for rental purposes by assigning rights or issuing a direction letter for title transfer
- Such a title change is viewed as a supply of real property with no exemptions for new constructions
- Assigning purchase agreements is seen as selling the original buyer’s interest, deemed a taxable supply under s. 192.1
- Under s. 155, taxable supplies are assumed to have fair market value consideration if the recipient is not a registrant using the property commercially
- The implications of these rules, such as potential GST/HST on half the value of deposits and property appreciation, were not discussed by CRA
Source: taxinterpretations.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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