Encyclopedia
Goods and Services Tax (GST) (commercial real property)
Sales of commercial real property are generally subject to GST. Who accounts for it depends on whether the buyer is registered.
For example: A buyer of a commercial building asks their accountant how GST will be handled at closing. (Illustration only, not a real deal.)
Tax names used here: Harmonized Sales Tax (HST). The Canada Revenue Agency (CRA) handles federal tax. Official source: CRA GST/HST Memorandum 19.4.1
Example only, not a real client. Say you are buying a small commercial building. Early on, your lawyer and accountant confirm how GST applies, whether you are registered and who accounts for it. You know exactly how much cash you need at closing, and the contract spells out the GST terms so there is no argument later.
What I’d tell a friend
Ask your accountant and lawyer how GST applies before you sign, not after. It can change the cash you need at closing.
Why it matters to you
GST often applies to commercial sales and rent. Getting the registration or elections wrong can leave you owing it.
How to use it in your deal
Buyers should confirm whether GST applies, whether they're registered, and how it will be handled at closing; many contracts say the price excludes GST. Registered buyers usually self-assess and file, while unregistered buyers pay GST to the seller. Mixed-use properties with residential parts can be split.
Sellers should get the buyer's GST registration number and a statutory declaration. Landlords must charge GST on rent if registered. Selling a business with property may qualify for an election under the tax rules so GST isn't paid on the transfer, if conditions are met. Mistakes can be expensive, so get your lawyer and accountant to check.
CRA publishes guides on real property and GST. Check the contract wording: a price stated as including GST costs the seller more than one that's plus GST. Buyers who plan to use the property mainly for exempt activities, like residential rentals, may not be able to claim credits, which changes the real cost. Ask about GST on assumed leases and deposits too.
Mistakes I see
Assuming no GST. Missing self-assessment. Confusing residential and commercial rules.
In BC and Vancouver
The Excise Tax Act and CRA guidance govern GST on real property.
Official sources: CRA GST/HST Memorandum 19.4.1 · CRA GST/HST Memorandum 19.2.1 · Excise Tax Act (Justice Laws)
How GST can apply to a sale
GST can apply to the sale of commercial property, unlike most resale homes. Who collects and accounts for it depends on the situation of the buyer and seller, including whether the buyer is registered for GST.
The rules are detailed and depend on the facts, so check CRA guidance and work with an accountant who handles real estate.
Leases and contracts
GST usually applies to commercial rent too, added on top of the rent.
Make sure your purchase contract and lease state clearly how GST is handled, so both sides know who pays it and how.
Questions to ask before you sign
- Does GST apply?
- Am I registered?
- Who remits it?
- Does the tax rules apply?
Keep reading
Related terms: GST going-concern election, Asset sale
Working through this right now? Questions are free. Book a 15-minute call or call or text 604 256 2002, and I’ll give you a straight answer.
Back to the A–Z index · common questions · tactics to watch for · the shorter glossary
General information for British Columbia only. It isn’t legal, tax, accounting or financial advice, laws and rates change, and reading it doesn’t make you my client. Any numbers or scenarios are hypothetical. Check the linked official source and talk to a lawyer, accountant or other qualified professional before you act or sign anything. See the terms and disclaimer.