I have had lots of calls about what taxes apply to new construction now that the HST is gone. The old 5% GST is still applicable. There is a rebate available to purchasers of new construction who will be using it as their primary residence. The rebate is 36% of the GST paid to a maximum rebate of $6,300. That is equivalent to a purchase price of $350,000.00. The rebate decreases proportionately on prices up to $450,000 and on prices over $450,000 there is no rebate at all. For buildings that were commenced prior to April 1, 2013 and were at least 10% complete by that date, there is also a 2% provincial transition sales tax. There are no rebates available for that. I also remind you that there is also a GST rebate available to purchasers of rental residential properties. The same limits apply as for purchases as a primary residence.

On occasion I represent real estate agents who are before the Real Estate Board or Real Estate Council or in court because of complaints lodged against them by their client. Often these cases arose out of a failure by the agent to properly communicate with his client. Either the client didn’t understand what the agent told them, the agent forgot to tell them something, or the client’s version of what was said is different from the agent’s version. As you have a fiduciary duty to your client there will always be an initial assumption by the adjudicators that you were at fault, otherwise why would the client have lodged the complaint? It will be for you through your evidence of what transpired to rebut that assumption. The problem is often that the agent does not have solid evidence. There is nothing in writing, no emails, or texts. The decision turns on whose verbal evidence the adjudicator thinks is most credible.

Therefore it is extremely important that you “paper” your file. If you tell a client how much his net proceeds will be after commissions, etc. don’t do it on your phone calculator and show it to him. Print it off or send it to him as an email or text so there is a hard copy. If you are explaining the significance of the non-residency provisions, put it in writing and get the client, if possible, to acknowledge that he received it and understands it. Something signed by the client, or that you can prove the client received, goes a long way to rebutting oral testimony by a client that he wasn’t told about it.

If you have any questions about this, please contact us and we will do our best to answer you.