Big White is AWESOME! Property & GST (not awesome) at Big White.

Er boring!

Yes I know.

I worked as a realtor at Big White for three years and I have developed & sold numerous homes on the mountain - GST always came up.

Goods and Services Tax (GST) is the biggest pain (for me) when it comes to home ownership at Big White. The rules are complicated and sometimes a grey area. I have been dealing with property for 13 years. When I set up Sólido Properties I consulted my accountant - PMF (who incidentally was a partner with KPMG) for some guidance. PMF referred me to a GST consultant.

1. GST is applicable on property purchases, in the time I have been at Big White this has ranged from 7%, 6%, 5%, 12% and now back to 5%. 12% on a $2m property, the sum is significant (I sold three $2m places and numerous $1m+)
2. GST can be deferred on the purchase price if the intent is to rent the property on a short term basis - 30 days or less, i.e. vacation rentals.
3. As an owner you are permitted your own use for 10% of the rentable period. With only a 5 month season at Big White, this equates to half a month or two weeks.
4. Without doing the actual analysis most realtors agree 95% of purchasers at Big White chose to defer the GST payment.
5. If you defer, you charge GST to your renters - makes sense really; if you will only use the property a couple of weeks a year, let your renters pay the tax.

In addition if you use a full management rental company, they usually charge the GST anyway.

But what happens if you use the property for 20% of the time one year? Or your renter wants to occupy the property for 11 weeks? (right now I have 60 skiers in the UK looking for 11 week rentals). Technically you are supposed to self assess and pay a proportionate amount of GST. What happens if next year your revert to below the 10% ceiling? Well you self assess again and claim back the GST... What happens if you occupy over two tax years like Christmas and New Year? Well, proportionate again, per year. 

Head hurting yet? What if you GST report monthly, quarterly, semi-annually, annually...?

Ok, what if you bite the bullet and pay the GST? Well a couple of things now (and this is not official - speak to your accountant) you may be able to get a new home rebate (36% of the 5% GST you pay.) Maybe...

In addition, you can pay your GST and then enjoy unlimited use and/or long term rentals and then change the usage back to short term (when you want to sell) and claim back the GST - but only up to the amount you originally paid. So if you pay at a $200k value today and the property doubles in value you can only recover at the $200k level, at the rate you paid.

Again - talk to your accountant and even then the answer may still be wrong...

With GST at 5% and property values below the 2000 levels (in some properties) it could be worth paying...

So (this is not to advice) the path I am going to follow with my properties here. I am going to pay the GST on the property, and since it has always been GST registered, try to claim back the rebate.

Sólido Properties owns, manages, rents properties and buys (beer) at Big White Ski Resort - and the disclaimer again - this is not accounting or tax advice!

For more confusion visit Revenue Canada.