Special Election for Immovables

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Most sales and leases of immovables (real property) by public service bodies (PSBs) are tax-exempt. Even if you are a registrant, you may not claim input tax credits (ITCs) or input tax refunds (ITRs) to recover the taxes you paid on the acquisition of immovables used primarily in the course of your exempt activities, or on any improvements to such immovables.

However, you may elect to have exempt sales and leases of immovables treated as taxable. This election allows you to claim ITCs and ITRs for the GST and QST you paid on an immovable, based on its percentage of commercial use. For example, an immovable that is used in more than 10% of your commercial activities gives entitlement to ITCs and ITRs for the GST and QST paid on the acquisition of the immovable, on any improvements thereto and on expenses related to it, based on the immovable's percentage of commercial use. The rule pertaining to primary use (50% rule) that a PSB generally follows in claiming ITCs and ITRs for immovables no longer applies. For more information, refer to Capital Property.

You may elect to have exempt sales and leases of immovables treated as taxable under the following conditions:

  • The immovable is capital property.
  • The immovable is held in inventory.
  • The immovable is leased for the purpose of re-leasing it.

The term “immovable” includes both land and the buildings located on it.

To make this election, you must complete form FP-2626-V, Election or Revocation of the Election by a Public Service Body to Have an Exempt Supply of Real Property (an Immovable) Treated as a Taxable Supply.

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