Ontario Tax Sale Property Forum

Tax Sale Forum => Questions and Answers => Topic started by: bee on May 26, 2015, 08:22:59 PM

Title: HST on old cottage
Post by: bee on May 26, 2015, 08:22:59 PM

Hi guys,

Help me out here, I just purchased old cottage on 2 Ac of land and treasurer is charging HST on it, any idea why? Can I argue on this? It?s was own before, zoned limited access, not residential. Is there any help from CRA sources?
Also, treasure telling me that because it?s never been resale (owner purchased vacant land and then build on it) it should be HST. NO HST on resale, but  It?s not new lot ether, they should not charge HST. Any idea?

Thanks

Title: Re: HST on old cottage
Post by: Matt on May 27, 2015, 12:05:08 AM

As I understand it, there is no HST on purchase price of a used home, cottage, condo or hobby farm.

I suggest, however, you speak to your accountant immediately and let him or her contact the treasurer for you.
This way, you can get to the bottom of it..

Title: Re: HST on old cottage
Post by: Frank on May 27, 2015, 01:01:45 AM

I believe you will have to pay, and apply to CRA after for a refund. 

Problem is you are buying from a municipality not from the previous owner.  They have no way of certifying that this wasn't a commercial, or rental situation, or even that there is a building there, nor do they care....their attitude will be that they will charge it and avoid any misunderstanding later.  By that I mean, if Rev Can comes back and says they should have charged it, then they will be forced to pay it, and can't go back on you for it, so they want it up front to protect themselves.

Sounds like the Treasurer may be wrong, and perhaps your lawyer could provide them with a letter to comfort them basically saying that if it is ever found to apply you will gladly pay it.  Give that a try, might work, but will have to get your lawyer involved.  8)

Title: Re: HST on old cottage
Post by: bee on May 27, 2015, 03:20:17 AM

Thanks All, will go to my lawyer tomorrow

Title: Re: Delaying HST on old cottage - Another Approach
Post by: Dave2 on May 27, 2015, 04:31:51 PM

Quote from: bee on May 27, 2015, 03:20:17 AM

Thanks All, will go to my lawyer tomorrow

Bee:  

To elaborate on Frank's comment, not certain of your personal situation but if you have an HST number you maybe able to delay the HST payment while you seek the Revenue Canada ruling.  It is a process similar to that you encounter in commercial real estate between buyer and seller both of which have an HST number.  

Here is what I do in comparable situations.  

First I have an HST number for all my tax sale dealings because of the volume (I am considered in the business of buying and selling land.). Note I don't fool around with HST because I have been already audited once and expect to get audited again.  HST is properly handled, paid, recorded, and filed.  

If on purchase I encounter a situation where treasurer levies HST I provide them with a declaration of my HST status that is sworn before a commissioner of oaths.  In effect I say I will take care of the HST issue.  Note in case like  this  if it comes with a lot of land you can only claim HST exemption on a portion of the total parcel (I believe it is a hectare) (If I am wrong this guy   8) will beat me up and charge his usual fee )

Personal issues like this I do not like to post on a public board so if you PM me  I can provide you a sample including a twist that may surprise you.  (not for public discussion)  ;) if something I suspect is true we will confidentially discuss it.)

The only difference between me and Frank is I have to save my tax sale expense money for beer not lawyers and it depends on the treasurer if he or she will accept it.  (Frank is a real class act and he expects the finest of beers).