To help build affordable rental housing, the federal government has announced new legislation to improve the Goods and Services Tax (GST) Rental Rebate on new purpose-built rental housing such as apartment buildings, student housing, and senior residences.

The enhanced GST Rental Rebate:

• increases to 100 per cent from the current 36 per cent; and
• removes the existing GST Rental Rebate phase-out thresholds for purpose-built rental housing projects.

The rebate applies to projects that begin construction on or after September 14, 2023, and on or before December 31, 2030, and complete construction by December 31, 2035.

For a two-bedroom rental unit valued at $500,000, the enhanced GST Rental Rebate results in $25,000 in tax relief, according to the September 14, 2023 news release. 

Eligible new residential units are those that qualify for the existing GST Rental Rebate and are in buildings:

1. With at least four private apartment units (a unit with a private kitchen, bathroom, and living areas), or at least 10 private rooms or suites (a 10-unit residence for students, seniors, or people with disabilities);
2. With at least 90 per cent of residential units designated for long-term rental; or
3. That are projects that convert existing non-residential real estate, such as an office building, into a residential complex if all other above conditions are met.

The enhanced GST Rental Rebate doesn’t apply to individually-owned condominium units, single-unit housing, duplexes, triplexes, housing co-ops, and owned houses situated on leased land and sites in residential trailer parks.

This housing would continue to qualify for the existing GST Rental Rebate where the conditions for the existing rebate are met.