The resale of cottages, condominiums, houses and apartment buildings is generally GST exempt except where the building has been substantially renovated and therefore designated “new,” that is, all of the building except the foundations, walls, floors and roof have been replaced or removed.

Intention can also be a factor in GST exemption. If a new house is purchased with the intention of resale then GST is due on the resale. However, if you have to sell your new home before you can move in because of a job transfer, the resale will probably not be subject to GST.

When you buy a new home, GST applies except when the new housing rebate applies. The amount of rebate is related to the fair market value of the property and the rules are different for owner-built and substantially-renovated homes.

Confused yet? Keeping track of who is liable to pay GST is one of many responsibilities of a real estate professional, but it’s a good idea to make sure you ask about this tax. While real estate salespeople and brokers know the general GST applications, never rely on them for the absolute word. They are the first to admit that GST is a complex financial area and one best left to accountants, tax advisors and the Canada Customs and Revenue Agency (CCRA).

If you are a buyer, the real estate professional working for you, will create clauses and conditions in any offers you make that favour you, usually that is “GST included.” Sellers have real estate salespeople working in their interests to see that these clauses do not put their client, the seller, at a disadvantage and they usually prefer to see “GST not included.” GST liability can be a bargaining point, but just be sure the extra 7% is not an unpleasant surprise on closing by keeping track of who pays.