Construction or Substantial Renovation of a Residential Complex
The builder's rights and obligations vary according to whether the builder sells, leases or lives in a residential complex that he or she built or substantially renovated. Applicable rights and obligations likewise vary according to whether the builder sells, rents or lives in an addition to a multi-unit residential complex that he or she built.
Construction of a residential complex for the purpose of leasing it or living in it
In general, a builder that builds or substantially renovates a residential complex, or that builds an addition to a multi-unit residential complex, in order to lease it (in whole or in part) or to live in it, is considered to be both the seller and the purchaser of the residential complex or the addition to the multi-unit residential complex.
The builder is deemed to have made a self-supply of the residential complex or of the addition to the multi-unit residential complex. In this case, the builder must, as a rule, remit the taxes deemed collected and calculated on the fair market value of the complex or the addition.
The taxes paid on the construction or substantial renovations, as well as any un-recovered taxes paid on the acquisition of the land included in the residential complex, may give entitlement to an ITC and ITR, provided the builder is a registrant. If the builder is not a registrant, a tax rebate may be granted under certain conditions.
In addition, to recover a portion of the taxes paid on the self-supply, the builder can claim a new residential rental property rebate for the GST and the QST paid using form FP-524-V, New Residential Rental Property GST Rebate Application, and form VD-370.67-V, New Residential Rental Property QST Rebate.
For more information, see Construction or Renovation of Residential Complexes, Residential Complexes and New or Substantially Renovated Residential Rental Property.
Sale of a new residential complex or new residential rental property
A builder who sells a new residential complex or a residential complex to which the builder has made substantial renovations, other than new residential rental property, to an individual can usually pay or credit the amount of the GST and QST rebate granted for a new residential complex to the individual. In these cases, the individual and the builder must complete form FP-2190.C-V, GST-QST New Housing Rebate Application: Rebate Granted by a Builder. The builder must then send it to Revenu Québec along with the GST and QST returns for the reporting period in which the builder paid or credited the rebate to the individual.
In the case of new residential rental property, the builder cannot pay or credit the individual the amount of the GST and QST rebate. The individuals can claim this rebate using form FP-524-V, New Residential Rental Property GST Rebate Application, and form VD-370.67-V, New Residential Rental Property QST Rebate.
For more information, see Residential Complexes, New or Substantially Renovated Housing and New or Substantially Renovated Residential Rental Property.
Lease of a residential complex built for the purpose of being sold
A builder registered for the QST that leases for residential purposes a single-unit residential complex or a residential unit held in co-ownership that he or she built in order to sell is deemed to have made a self-supply of the complex.
The builder can elect not to include the QST deemed collected in his or her net tax for the period in which the self-supply was made. To make this election, the builder must file form VD-224.1-V, Election Respecting the Self-Supply of a Residential Complex, with Revenu Québec. Payment of the QST can be deferred for a period of up to 12 months.
Note there is no such election under the GST system.