I have purchased a new condo that is scheduled to close in a few days and my lawyer has called requesting I indicate if I will be moving into the unit or if I am buying as an investment. I don’t see this being any of his business, or that of the builder, as I am buying it with my savings so there is no mortgage on the property. How should I respond to this inquiry?

The answer to the question is extremely important from a documentation perspective and in the end result, the amount you pay for the condo.

 

Built into almost all new condominium Agreements of Purchase and Sale is the provision that GST/HST is included in the purchase price. This is standard, and effectively lowers the actual value of your property at the time of registration.

 

The federal government, in a move to spur new home and condo development, has instituted a tax break for purchasers of new builds whereby if the buyer is purchasing for themselves or for a close family member to live in the home, they offer a GST/HST rebate. This amounts to approximately 36 per cent of the applicable built-in tax. This rebate is not available to people who are purchasing new property as an investment, for whatever reason.

 

When you attend at your lawyer’s office to sign the documents for your new home, you have to swear a declaration in front of the staff member that you will occupy the premises. If you fail to occupy the residence after swearing to do so and you are caught by the Canada Revenue Agency, not only will you have to refund the tax rebate — which the builder claims on your behalf — but you could have criminal charges brought against you under the Canada Evidence Act.

 

It is a criminal offence to swear a declaration with a Commission of Oaths that is not true.
Therefore, you need to be quite clear and up front with your lawyer as to how you will take possession of your new home or condo.


Clearly, you are treading on thin ice if you think you can claim the rebate if you do not move into the property.