Hi, I feel pretty remedial in my experience as an investor just getting started. I appreciate the information in the jurock emails, it's helping me learn quite a bit. This question feels really obvious, but I hope you don't mind my asking anyway.
I am self-employed and use my home as a base of operations and office for my business. If we sell our home and buy a brand new home, is the GST deductible? Or at least a portion of the GST?
Thank you for your time,
SXXXXX
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david ingram replies;
The GST is not deductible unless you want to be registered as a seller of new property. So- you CAN get a refund (or at least a credit) if you buy it with a GST number for resale. However, as soon as you start living in it, you have to self-assess your GST and if the property had gone up between purchase and move in, you would be paying MORE GST.
In terns of using a portion of the house as a GST credit for your business, this works for a car and I see no reason why it would not work for a business. However, when you sell, you would have to charge the next purchaser GST on that part of the house that you had not used as a residence.
Although not in Bulletin IT-120-R6, I can imagine that the CRA will then expect Capital Gains tax to be paid on that portion of the house when sold.
Does not make any sense to me.
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