On September 14, 2023, the federal government announced it would remove the Goods and Services Tax (GST) on the construction of new apartment buildings for renters.
How it works
- The GST Rental Rebate on new purpose-built rental housing rises from 36% to 100%, and the phase-out thresholds are removed.
- It applies to projects that start construction from September 14, 2023 to December 31, 2030 and finish by December 31, 2035.
- Buildings need at least four private apartment units or 10 private rooms, with 90% of units for long-term rental. Office-to-residential conversions can qualify.
- For a two-bedroom rental unit valued at $500,000, Finance Canada estimates $25,000 in tax relief.
- Individually owned condos, single homes, duplexes, triplexes and substantial renovations do not qualify.
The announcement also asked provinces to match the rebate and said Housing Accelerator Fund approvals would require cities to end exclusionary zoning.
What it means for Calgary
Calgary’s rental market is very tight, and more purpose-built rentals would ease pressure on rents over time. For homebuyers, the effect is indirect. Alberta has no provincial sales tax, so the federal GST is the only sales tax on new rentals here.
Why Ottawa is doing this
The Prime Minister announced the measure on September 14, 2023 in London, Ontario, as part of a package on housing, small business and grocery prices. The government said builders facing higher construction costs because of global inflation need a financial incentive to go ahead with projects that would not otherwise be built. Removing the GST, it argued, will encourage builders to build more homes and bring rents down over time. The change requires legislation, which the government said it would introduce.
GST rental rebate on new purpose-built rental housing
What exactly changes
Until now, the GST New Residential Rental Property Rebate gave back 36% of the GST, and it phased out for higher-value units. The enhanced rebate covers 100% of the GST and removes the phase-out thresholds. It applies to new purpose-built rental housing, meaning apartment buildings, student housing and senior residences built specifically for long-term rentals. Projects must begin construction between September 14, 2023 and December 31, 2030 and be completed by December 31, 2035.
Finance Canada’s example is a two-bedroom rental unit valued at $500,000, where the enhanced rebate would provide $25,000 in tax relief. Co-ops, individually owned condos, single-unit homes, duplexes and triplexes do not qualify, and neither do substantial renovations of existing buildings.
The other housing measures in the announcement
Ottawa called on provinces that apply provincial sales tax or the provincial part of the HST to rental housing to match the rebate. It also said cities must end exclusionary zoning and encourage apartments near public transit to have their Housing Accelerator Fund applications approved. The fund, launched in March 2023, is a $4 billion program running until 2026–27 that aims to unlock about 100,000 new homes across Canada.
The Calgary angle
Alberta has no provincial sales tax, so there is nothing for the province to match, and the federal rebate removes the only sales tax on eligible new rental buildings here. CREB said in its August report that tight rental markets are pushing many people to buy apartment condos, and apartment sales so far this year reached a record 5,582. More purpose-built rentals could ease some of that pressure over time. The zoning condition is also relevant: Calgary is preparing its own Housing Strategy, which council considered in September.
What it means for buyers, sellers and investors
- Condo buyers and owners: the rebate does not apply to individually owned condos, so it does not change the GST on a new condo you buy to live in or rent out.
- Small investors: duplexes and triplexes do not qualify; buildings need at least four apartments or 10 private rooms, with 90% of units for long-term rental.
- Renters: the effect will take years, since new buildings must first be designed, approved and built.
