After The Sale | GST & Tax
GST and Tax on Unit Sales
Building new housing and selling it makes you a builder for GST purposes, whatever the size of the building. Each unit sale is a taxable supply. The decision to rent instead of sell is itself a tax event, and it is the one that surprises people mid-project.
Key takeaways
- A newly built residential unit sold by a builder is a taxable supply. GST applies to each unit sale.
- The New Housing Rebate is assessed per unit, so four units mean four separate determinations.
- Rebate eligibility depends on the buyer, requiring the unit to be their primary place of residence and the price to fall within the thresholds.
- Switching from selling to renting can trigger self-supply, treating the builder as having sold the unit to themselves at fair market value.
- This has no unit threshold. Like warranty, it does not track REDMA's five-unit line.
Why selling units makes you a builder
For GST purposes the word builder is a defined term rather than a description of a trade. A person who constructs new residential housing with the intention of selling it is generally a builder, whether or not they swing a hammer and whether or not they run a construction company. A homeowner who develops their lot into four units and sells three is doing something the tax system treats as a commercial activity.
The consequence is that each unit sale is a taxable supply. GST is collected on the sale price and remitted. Against that, GST paid on construction inputs is generally recoverable through input tax credits, which is the mechanism that keeps the tax from compounding through the build.
This is a different mental model from selling an existing home, where a resale of used residential property is generally exempt. New housing is taxed and used housing is not, and building a multiplex on your own lot moves you from one category to the other.
The rebate is a per-unit question
The GST New Housing Rebate reduces the tax burden on a new home where the purchaser will use it as their primary place of residence and the price falls within the applicable thresholds. Every element of that test is about a specific unit and a specific buyer.
On a four-unit building this means four separate determinations rather than one project-level answer. A buyer purchasing a unit to live in may qualify. A buyer purchasing the unit next door as a rental investment is answering a different question, because the primary residence condition is about their use. Two units in the same building can land differently.
Thresholds and rebate mechanics change with federal budgets, so confirm the current figures rather than working from a number remembered from a previous project. This page deliberately does not state threshold amounts, because a stale threshold is worse than no threshold.
The self-supply rule
Self-supply is the rule that catches a builder who stops selling and starts renting. Where a builder leases a newly constructed residential unit rather than selling it, the builder is generally treated as having made a supply of the unit to themselves at fair market value, and GST is calculated on that deemed sale.
The logic is that new housing should bear GST once. Without the rule, a builder could avoid the tax on new construction by renting instead of selling, while a buyer of an identical new unit paid it. Self-supply equalises the two.
The practical difficulty is timing. The liability crystallises when the unit is first leased and occupied, at fair market value, on a project that has just spent its money building. There are no sale proceeds arriving to fund it, because the decision was to rent. A developer who switches from sell to rent after presales soften can meet a tax bill in the same month the rental income starts.
Model this before the decision rather than after. Build-to-rent as a plan from the outset is a well-understood structure with its own financing and tax treatment. A mid-project switch is where the surprises live.
New housing against used housing
The distinction that drives everything on this page is between new residential housing and used residential housing. A resale of a used home is generally exempt from GST, which is why an ordinary house sale between two homeowners involves no GST on the price.
New housing is taxed. The first sale of a newly constructed unit brings the tax into the chain, and every subsequent resale of that same unit is a used-housing transaction that does not. This is why a homeowner who has only ever bought and sold existing homes has no intuition for the tax treatment of the multiplex they just built.
Demolishing a house and building four units does not preserve the used status of the original property. What is sold afterwards is four new homes, and the tax follows what was sold rather than what was there before.
Price the tax into the deal, explicitly
A purchase agreement should state plainly whether the price includes or excludes GST, and how any New Housing Rebate is handled. Where the buyer qualifies for the rebate, agreements commonly assign it to the builder and reflect the net position in the stated price, which is workable when the parties understand what has been done.
It stops being workable when the buyer turns out not to qualify. If the price assumed a rebate the buyer cannot claim, because the unit will not be their primary residence, the shortfall has to land somewhere. That is a dispute at completion, on a deal that both sides thought was settled.
The way to avoid it is to establish the buyer's intended use before pricing the unit, and to write the rebate treatment into the agreement rather than leaving it to be worked out by the conveyancers.
Best for, fails when, verify before
Selling units works when
The plan was to sell from the start, input tax credits were claimed through the build, and buyers are owner-occupiers who may claim the rebate.
It fails when
Presales soften and the developer rents the units instead, triggering self-supply on a project with no sale proceeds arriving.
Verify before you decide
Your builder status, current rebate thresholds, and the self-supply consequence of renting, with a Canadian tax advisor.
Structure the ownership before you build
How the project is owned affects the tax outcome, and it is settled at the start. Building personally, through a corporation, or through a partnership each produce different treatment on the sale proceeds and different consequences if the plan changes to renting partway through.
There is also the question of whether the gain on sale is income or a capital gain. A project built with the intention of selling is generally on income account, which is a different rate from the capital gains treatment a homeowner might expect from selling a property they have lived in. Intention at the time of acquisition and construction is central to that determination.
None of these can be fixed after completion. A developer who reaches the sale stage and then seeks advice is asking what their position is, rather than choosing it. Take advice while the structure is still a decision.
Common mistakes
- Assuming a small project is not a commercial activity. Builder is a defined term, and a homeowner selling three of four new units generally meets it.
- Switching to renting without modelling self-supply. The liability lands at fair market value with no sale proceeds arriving to fund it.
- Pricing units on a rebate the buyer cannot claim. The primary residence condition is about the buyer's use, so an investor purchaser answers differently.
- Using a threshold figure from a previous project. Rebate mechanics change with federal budgets.
- Leaving the GST treatment out of the purchase agreement. Whether the price includes tax should never be inferred at completion.
Where to go next
- The GST rebate on a new BC multiplex goes deeper on rebate mechanics.
- Strata or sell whole covers the other route out of a finished project.
- The build-to-rent guide covers renting as a plan rather than a fallback.
Frequently asked questions
Is GST charged on the sale of a new multiplex unit? +
Yes. A newly constructed residential unit sold by a builder is a taxable supply, so GST applies to each unit sale. This differs from a resale of used residential property, which is generally exempt. Developing a lot into new units and selling them moves the transaction from the exempt category into the taxable one.
Am I a builder for GST purposes if I develop my own lot? +
Generally yes, if you construct new residential housing with the intention of selling it. Builder is a defined term in the tax rules rather than a description of a trade, so a homeowner who develops their lot into four units and sells three is treated as carrying on a commercial activity. Confirm your own position with a tax advisor.
How does the GST New Housing Rebate work on a multiplex? +
It is assessed per unit and per buyer. The rebate reduces tax on a new home where the purchaser will use it as their primary place of residence and the price falls within the applicable thresholds. On a four-unit building that means four separate determinations, and two units in the same building can be treated differently.
Can I claim input tax credits on construction costs? +
A builder making taxable supplies of new housing is generally able to recover GST paid on construction inputs through input tax credits. This is what stops the tax compounding through the build. Eligibility and timing depend on your registration status and how the project is structured, so confirm the mechanics with a tax advisor.
What is the self-supply rule? +
Where a builder leases a newly constructed residential unit rather than selling it, the builder is generally treated as having supplied the unit to themselves at fair market value, and GST is calculated on that deemed sale. The rule exists so new housing bears GST once whether it is sold to a buyer or retained and rented.
When does a self-supply liability arise? +
Generally when the unit is first leased and occupied as a residence. That timing is what makes it difficult: the liability crystallises on a project that has just spent its construction budget, with rental income starting rather than sale proceeds arriving. Model the cash consequence before deciding to rent rather than after.
Does the GST treatment depend on how many units I build? +
No. Unlike REDMA, which has a five-unit floor, GST on new residential housing carries no unit threshold at all. A builder selling two new units and a builder selling twenty are both making taxable supplies on each sale. Clearing the REDMA threshold tells you nothing about your tax position, and the same is true of the mandatory home warranty rules, which also apply regardless of building size.
What happens if I sell some units and rent others? +
The units are treated separately. Those sold are taxable supplies with GST collected on the sale price, and those retained and leased may attract the self-supply rule at fair market value. A mixed strategy therefore produces two different tax treatments in one building, which is a structure to plan with an advisor rather than improvise.
Is the buyer or the seller responsible for the GST? +
GST on a new home is generally payable by the purchaser and collected and remitted by the builder, with the rebate applied where the purchaser qualifies. How this is expressed in the purchase price matters commercially, so the agreement should be explicit about whether the stated price includes or excludes GST and how any rebate is handled.
Why does this page not state the rebate thresholds? +
Because rebate thresholds and mechanics change with federal budgets, and a stale figure in a guide is worse than none. A developer relying on a threshold remembered from a previous project can misprice units. Confirm the current figures with the Canada Revenue Agency or a tax advisor at the time you set prices.
Does the Property Transfer Tax apply as well? +
Property Transfer Tax is a provincial tax payable by the purchaser on the transfer of title, and it operates separately from GST. New-build and rental-related exemptions exist and change over time. Treat PTT as a separate determination for each unit sale rather than assuming it follows the GST answer.
Should I get tax advice before or after building? +
Before. The decisions that set your tax position are made early: whether the plan is to sell or rent, how the ownership is structured, and whether you register for GST. Advice sought after completion can only describe the position you are already in, which is the expensive time to discover a self-supply liability.
Sources and references
GST treatment of new residential housing is administered by the Canada Revenue Agency under the Excise Tax Act. Confirm current rebate thresholds and your own position with a Canadian tax advisor before relying on any figure.
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