Enhanced GST Rental Rebate to build more apartments for renters

On September 14, 2023, the Prime Minister announced that the government will introduce legislation to enhance the Goods and Services Tax (GST) Rental Rebate on new purpose-built rental housing, to incentivize construction of much-needed rental homes for Canadians.

To build more rental housing, the removal of GST will apply to new purpose-built rental housing, such as apartment buildings, student housing, and senior residences built specifically for long-term rental accommodation.

This enhancement increases the GST Rental Rebate from 36 per cent to 100 per cent and removes the existing GST Rental Rebate phase-out thresholds for purpose-built rental housing projects. The enhanced GST Rental Rebate will apply to projects that begin construction on or after September 14, 2023, and on or before December 31, 2030, and complete construction by December 31, 2035.

For a two-bedroom rental unit valued at $500,000, the enhanced GST Rental Rebate would deliver $25,000 in tax relief.

Qualifying new residential units would be those that qualify for the existing GST Rental Rebate and are in buildings with at least:

1. Four private apartment units (i.e., a unit with a private kitchen, bathroom, and living areas), or at least 10 private rooms or suites (e.g., a 10-unit residence for students, seniors, or people with disabilities); and,
2. Ninety per cent of residential units designated for long-term rental.

Projects that convert existing non-residential real estate, such as an office building, into a residential complex would be eligible for the enhanced GST Rental Rebate if all other above conditions are met. Public service bodies would also be eligible to access the enhanced GST Rental Rebate.

The enhanced GST Rental Rebate will not apply to individually-owned condominium units, single-unit housing, duplexes, triplexes, housing co-ops, and owned houses situated on leased land and sites in residential trailer parks, but this housing would continue to qualify for the existing GST Rental Rebate where the conditions for the existing rebate are met.

To protect Canadian renters from renovictions, the enhanced GST Rental Rebate will not apply to substantial renovations of existing residential complexes. This is intended to stimulate new supply, not take supply off the market.

The enhanced GST Rental Rebate for purpose-built rental housing will be effective as of today, subject to the passage of implementing legislation.