The short answer is no, but that doesn’t mean REALTORS^® can turn a blind eye to potential GST issues.

Given the variety of properties that REALTORS^® work with, assessing GST application falls outside REALTOR^® expertise and must be avoided. Here are some examples of properties that might have a complex application of GST:

• Residential Airbnbs that are registered as corporate entities and being used for a commercial purpose.
• Small acreage with a home.
• Large parcels of land with agricultural leases and a residence.

Members should always refer their clients to accountants or legal counsel if a question of GST arises or requires clarification. In this way, REALTORS^® can continue to provide their clients with skilled and conscientious service, while being forthcoming about when a matter is outside of their expertise. Referring clients to subject matter experts ensures the tax information they receive can be relied upon.

Buyers and sellers should always consult a GST expert to determine if GST is applicable to the property in question and discuss GST-related matters contained in the offer to purchase. Detailed records of advice given by GST experts should be carefully documented to reflect all discussions with the client.

It is important for listing agents to receive confirmation of GST applicability from the seller before listing the property. As a seller’s representative, it’s prudent to have this information to deliver the best service and guidance to their clients and demonstrate their due diligence. Furthermore, the listing agent will be able to provide this information to prospective purchasers or their representatives so they are aware of GST obligations.

Understanding buyer GST obligations

When representing buyers, it is important to ensure they pay attention to their GST obligations (e.g., new-build or substantially renovated homes and, if applicable, the GST rebates sometimes associated with them). A substantially renovated home is one in which most, or all, of the property – excluding the foundation, exterior walls, interior supporting walls, roof and staircases – has been removed or replaced.

Generally, buyers purchasing new or substantially renovated homes as their primary place of residence are eligible for GST rebates. “Primary place of residence” is a question of fact determined by the Canada Revenue Agency (CRA) on a case-by-case basis by weighing several factors. It is important to note that individuals buying these properties to “flip” them may not qualify. The CRA considers “flippers” to be homebuilders for the purposes of these GST rebates, ensuring only the end-buyer is entitled to the rebate benefits.

If purchasing a newly constructed property, speak to the builder to understand how the GST rebate is being handled within their builder purchase agreements.

In all cases, when questions of GST arise, REALTORS^® must ensure clients seek an expert opinion to avoid a potential errors and omissions insurance claim in the future. Real Estate Insurance Exchange's (REIX) Dave De La Ronde suggests the best way to protect yourself is to refer clients to tax experts and avoid weighing in on matters related to GST.

Accounting for unknown or unusual GST application on the MLS^® System.

When listing a residential property on the MLS^® System, if GST is applicable, it must be included in the list price.

If a member is listing a residential property and the application of GST is uncertain or complex (e.g., country residential properties), a statement of disclosure regarding GST due diligence must be included in the public remarks (CREB^® Rule Part III 2.01[b]). If a GST due diligence statement is included in the listing, it must also indicate whether the list price includes GST or not. It’s important to clarify this so consumers fully understand what the price figure represents and can construct offers accordingly.

For example, if a listing says, “GST application is unknown,” the listing must also say, “list price does not include GST.”

Just because the seller doesn’t know GST application, doesn’t mean the issue of GST disappears

Doug Dixon, Real Estate Council of Alberta’s (RECA) regulatory compliance advisor, emphasizes the importance of having GST application known before the seller offers the property for sale. Having this information from the onset of the listing agreement helps reduce confusion and unnecessary frustration during the transaction, because application of GST will have to be considered in purchase agreements even if it wasn’t known at the time of listing.

If the application of GST is not straightforward and sellers can’t get a professional opinion, we recommend seeking legal help to draft a term that can be used in the contracts to mitigate risk related to GST application. This becomes important during the purchase to ensure all parties are aware of expectations and responsibilities related to GST.

If you have any additional questions about GST applicability, please email CREB^® Member Practice at crebmp@creb.ca.