GST applies to most of the services provided in completing the real estate transaction.
For example, 7% GST is applied to the commission a REALTOR charges for facilitating a sale. The tax is paid by the person responsible for paying the commission - usually the seller.
REALTOR commissions are taxable even if the total GST owed is reduced by a rebate or the sale of the property is exempt from GST. For example, if you sell a used home, the sale price is exempt from GST but the REALTOR's commission is still taxable.
GST applies to many other services involved in the real estate transaction. These include fees for appraisals, referrals, surveys and legal assistance. Again, GST is charged on these fees regardless of whether the house you purchase is exempt from the tax.
One exception is that mortgage broker fees are exempt from GST if the fees are charged separately from any taxable real estate commissions. Additionally, mortgages and interest on mortgages are GST exempt.
GST and Rent
No GST is payable on residential rents. However, if you employ a REALTOR or another professional to find and arrange a tenant for your rental property, GST applies to the fees and commissions they charge for providing this service.
GST also applies to the fees charged to the landlord for property management, as well as repair and maintenance services.
Monthly fees charged by condominium associations are not subject to GST.
When is GST payable?
GST is normally due and payable when the real estate transaction is completed. This is usually referred to as the "closing date".
For buyers, GST owed on the purchase price of non-exempt property, as well as fees and commissions for professional services, is paid at closing.
For sellers, GST owed on fees and commissions for professional services is also paid at closing.
Your REALTOR can answer your questions about the closing date and GST payments.