Co-op housing corporations carved out of purpose-built rental GST/HST rebates unless equity-transfer rules are met

Plain-language summary · AI-assisted

Amendments to Canada's Real Property (GST/HST) Regulations introduce the concept of an "excluded equity housing supply," which blocks certain co-operative housing transactions from qualifying for the enhanced GST/HST rebates available to purpose-built rental housing. Specifically, a sale of a residential complex to a corporation is excluded from rebate eligibility if the corporation issues shares that give the buyer a right to occupy a unit (a proprietary-lease arrangement) and there is no statutory or contractual cap preventing the shareholder from reselling those shares at a higher price. New section 3.1 clarifies that co-operative corporations are treated as corporations for these purposes, and that the total consideration for a share includes all amounts paid for related interests in the complex or unit. A new condition (section 4.1) is also added for co-operative housing corporation rebates under the Act, requiring that the supply not be an excluded equity housing supply. Operators of co-operative housing projects or advisers structuring such transactions should review whether their share-transfer arrangements include price-limitation restrictions, as that determination will govern rebate eligibility.

Who this affects
cooperative housing corporations · real estate developers selling to co-ops · GST/HST registrants claiming purpose-built rental rebates · tax and legal advisers on residential real property transactions