Understanding when GST applies to Vancouver home purchases can save you tens of thousands of dollars. Learn the rules for new construction, presales, substantially renovated homes, and how to claim rebates.
GST on Vancouver real estate catches many buyers off guard. While resale homes don’t attract GST, new construction, presales, and substantially renovated properties do—adding 5% to your purchase price. Understanding when GST applies and how rebates work can save you significant money on your Vancouver home purchase.
The rules aren’t intuitive. A “new” condo that’s sat vacant for three years might not have GST, while a 1950s house with extensive renovations might. This guide breaks down exactly when GST applies, how to calculate what you’ll owe, and strategies to minimize your tax burden.
When Does GST Apply to Vancouver Real Estate?
GST applies when you’re purchasing property from someone in the business of selling real estate—typically builders, developers, or those who’ve substantially renovated a property. Here’s the breakdown:
GST Applies To:
- New construction from a builder or developer
- Presale condos purchased from the developer
- Substantially renovated homes (90%+ of the interior removed/replaced)
- Converted commercial properties (warehouse to residential loft, etc.)
- Builder-owned homes never occupied as a residence
- Assignment sales where the original buyer assigns to you
GST Does NOT Apply To:
- Resale homes from individual owners
- Resale condos in any building regardless of age
- Used homes even if the seller is a business
- Bare land without a building (generally)
- Properties lived in by the builder as primary residence for 1+ year
The key distinction: Who is selling, and has the property been used residentially? If a builder sells a home they’ve never lived in, GST applies. If that same builder lives in the home for a year before selling, it doesn’t.
GST Rate and How It’s Calculated
The federal GST rate is 5% across Canada. In BC, there’s no provincial sales tax (PST) on real estate, so you’re only dealing with the 5% federal GST.
Basic Calculation
| Purchase Price | GST (5%) | Total with GST |
|---|---|---|
| $800,000 | $40,000 | $840,000 |
| $1,000,000 | $50,000 | $1,050,000 |
| $1,200,000 | $60,000 | $1,260,000 |
| $1,500,000 | $75,000 | $1,575,000 |
For Vancouver’s typical new construction prices, GST adds $40,000-$100,000+ to your purchase. This is where rebates become critical.
GST New Housing Rebate Explained
The federal government offers a GST New Housing Rebate that reduces the effective tax rate for qualifying purchases. The rebate is designed for primary residences, not investment properties.
Rebate Amounts
The maximum rebate is 36% of GST paid, capped at $6,300.
| Home Price | GST Paid | Rebate (36%) | Net GST | Effective Rate |
|---|---|---|---|---|
| $350,000 | $17,500 | $6,300 | $11,200 | 3.2% |
| $400,000 | $20,000 | $6,300 (max) | $13,700 | 3.4% |
| $450,000 | $22,500 | $6,300 | $16,200 | 3.6% |
| $481,500 | $24,075 | $0 (phased out) | $24,075 | 5.0% |
| $600,000+ | $30,000+ | $0 | $30,000+ | 5.0% |
Rebate Phase-Out
The rebate phases out between $450,000 and $481,500:
- Below $450,000: Full 36% rebate (max $6,300)
- $450,000-$481,500: Partial rebate, declining to zero
- Above $481,500: No rebate available
Vancouver reality check: With average new condo prices well above $500,000 and new homes over $1 million, most Vancouver buyers won’t qualify for any rebate. The thresholds were set years ago and haven’t kept pace with the market.
Eligibility Requirements
To claim the New Housing Rebate:
- Primary residence: You or a family member must live in the home as a primary residence
- New or substantially renovated: Property must qualify as new construction
- Individual buyer: Corporations don’t qualify (some exceptions for family trusts)
- Timely application: Claim within 2 years of purchase closing
GST on Presale Condos
Presale purchases have specific GST considerations that catch buyers off guard:
When GST Is Charged
For presales, GST is typically due at completion (when you take possession and title transfers), not when you sign the contract. However, your deposit schedule might include GST, depending on contract terms.
Contract Price: GST Included or Extra?
Always verify whether the presale contract price includes or excludes GST:
- GST included: The stated price covers everything—this is more common in Vancouver
- GST extra: You’ll pay 5% on top of the contract price at closing
Critical: Read your contract carefully. A $800,000 presale “plus GST” means $840,000 at closing. Budget accordingly.
Assignment Sales and GST
If you assign a presale contract before completion:
- You may owe GST on your profit (the difference between your contract price and assignment price)
- The assignee will owe GST on the full purchase price at completion
- Builder policies vary—some don’t allow assignments, others charge fees
Assignment GST is complex. The CRA treats assignment profits as business income or capital gains depending on circumstances, and GST may apply to the assignment itself. Consult a tax professional before assigning.
Substantially Renovated Homes
A “substantially renovated” home is treated like new construction for GST purposes. This surprises many buyers purchasing older character homes that have been updated.
What Qualifies as “Substantially Renovated”?
The CRA definition requires removal or replacement of 90% or more of the interior of the building. This means:
- All or most interior walls removed and replaced
- New plumbing, electrical, HVAC throughout
- New flooring, ceilings, fixtures throughout
- Essentially a gut renovation down to the studs
What doesn’t qualify:
- Kitchen and bathroom renovations alone
- New flooring and paint throughout
- Adding a secondary suite
- Exterior-only renovations
The Grey Area
Many renovations fall into a grey area. If a seller claims their renovated home doesn’t attract GST, but the work was extensive, the CRA may disagree later. As a buyer, protect yourself:
- Ask for documentation of the renovation scope
- Get legal advice if the renovation was extensive
- Include contract terms addressing GST responsibility
GST on Multiplex Purchases
Vancouver’s multiplex boom creates specific GST scenarios for buyers:
Buying a New Multiplex Unit
If you purchase a unit in a newly built duplex, triplex, or fourplex from a developer:
- GST applies (5% of purchase price)
- Rebate may apply if you’ll live in the unit (subject to price thresholds)
- No rebate if purchasing as an investment property
Buying an Entire New Multiplex
Developers sometimes sell entire multiplexes to investors:
- GST applies on the full purchase price
- No residential rebate available (investment property)
- May qualify for commercial rebates in some structures
Converting to Owner-Occupied
If you purchase a new multiplex unit as a rental, then later move in yourself, you may be able to claim the rebate retroactively—but only within 2 years of the original purchase and subject to price thresholds.
How GST Affects Your Budget
When budgeting for new construction or presale purchases, factor GST into your total costs:
Sample Budget: $900,000 Presale Condo
| Cost Component | Amount |
|---|---|
| Purchase price | $900,000 |
| GST (5%) | $45,000 |
| GST rebate | $0 (price > $481,500) |
| Net GST cost | $45,000 |
| Property Transfer Tax | $16,000 |
| Legal fees | $1,500 |
| Total closing costs | $62,500 |
Sample Budget: $1.4M New Townhouse (Owner-Occupied)
| Cost Component | Amount |
|---|---|
| Purchase price | $1,400,000 |
| GST (5%) | $70,000 |
| GST rebate | $0 (price > $481,500) |
| Net GST cost | $70,000 |
| Property Transfer Tax | $30,000 |
| Legal fees | $2,000 |
| Total closing costs | $102,000 |
Compare to a resale home at the same price—no GST, saving $70,000 in this example.
Strategies to Minimize GST Impact
1. Consider Resale Properties
The most straightforward way to avoid GST: buy resale. In Vancouver’s market, many near-new condos and townhouses are available as resale properties from original owners. You get a newer home without the GST burden.
2. Negotiate GST-Inclusive Pricing
When purchasing new construction, negotiate for GST to be included in the stated price. While this doesn’t reduce your total cost, it simplifies budgeting and comparisons.
3. Time Your Purchase Strategically
For presales, understand when GST is due. If the purchase closes in a different tax year than expected, plan accordingly for the cash flow impact.
4. Claim All Eligible Rebates
If you qualify for the New Housing Rebate (primary residence under $481,500), ensure you file the application. Many builders handle this at closing, but verify it’s been done.
5. Structure Investment Purchases Carefully
For investment properties, GST is a straight cost with no residential rebate. Factor this into your ROI calculations when comparing new construction investments to resale properties.
Key Takeaways
- GST (5%) applies to new construction, presales, and substantially renovated homes—not resale properties
- The GST New Housing Rebate offers up to $6,300 back for owner-occupied homes under $450,000 (phasing out by $481,500)
- Most Vancouver new construction exceeds rebate thresholds, making GST a significant additional cost
- Presale contracts may include or exclude GST—verify before signing
- Assignment sales can trigger GST obligations on your profit
- Budget an extra 5% when comparing new construction to resale options
Frequently Asked Questions
Do I pay GST on a resale condo in Vancouver?
No, GST does not apply to resale properties regardless of the building’s age or original construction. When you purchase from an individual owner (not a builder or developer) who has used the property residentially, there’s no GST. This makes resale condos more affordable than comparable new units by approximately 5%.
How do I know if GST is included in a presale price?
Check your purchase contract for language specifying whether the price is “GST included” or “plus GST.” Vancouver developers commonly include GST in stated prices, but not always. If unclear, ask the developer’s sales team directly and get written confirmation before signing.
Can I claim a GST rebate on an investment property?
No, the GST New Housing Rebate is only available for properties used as your primary residence (or a relative’s primary residence). Investment properties don’t qualify. However, if you’re GST-registered for business purposes, you may claim input tax credits instead—consult an accountant about your specific situation.
What happens if the builder didn’t charge me GST but should have?
If a transaction is later determined to require GST that wasn’t collected, the CRA can pursue the GST amount from either the vendor or purchaser. As a buyer, protect yourself by getting legal advice when purchasing any substantially renovated property, and include contract terms addressing GST responsibility.
Does GST apply when buying from a property flipper?
It depends on whether the flipper is considered to be in the business of selling real estate. If someone regularly buys, renovates, and sells properties, the CRA may classify them as a builder, making their sales subject to GST. Single-property flippers who occasionally sell may not trigger GST. The determination is case-by-case.
Work with Rain City Properties
Navigating GST on Vancouver real estate requires understanding not just the tax rules, but how they interact with different purchase scenarios. Whether you’re buying a presale condo, considering new construction, or wondering if that renovated character home attracts GST, getting the details right affects your bottom line by tens of thousands of dollars.
Greyden Douglas and the Rain City Properties team work with buyers across Vancouver’s west side, guiding clients through the complexities of new construction and presale purchases. With direct relationships with local developers and two decades of transaction experience, we help you understand the true cost of every property you consider.
Contact Greyden Douglas directly at (604) 218-2289 or book a call to discuss your Vancouver real estate purchase.
