idea
GST needs to be paid on new properties. Portion or entirety can be deferred if it is used for commercial purposes, in the form of an Input Tax Credit (ITC). If the property is sold before GST has been paid in full, then it is due in full by the new owner. GST is 5% of property price.
To file an ITC and defer GST, buyer needs to register for a GST number before the closing date.
ITC calculation
To calculate personal use for the ITC, we need to use the actual number of days the apartment is rented and the number of days we occupied it ourselves. The calculation is made based on actual occupancy, non rented days don't count even if it's on the market for rental. CRA auditors look at availability as well. If we do maintenance, it doesn't count towards personal use but counts towards total occupancy.
\[occupancy_{personal} = \frac{days_{personal use}}{days_{rented} + days_{personal use} + days_{maintenance}}\]
Year 0: For the period at the end of this year (Dec 18th to Dec 31st): CRA is usually good on the first year, especially since it's really just two weeks. We can claim that we were getting it ready to rent it, this seems reasonable. We will claim an ITC > 90% and defer 100% of GST.
Year 1: If we rent out 153 days, occupy 40 days, this is 21% personal occupancy (40/193). Therefore we would pay 21% of GST in 2022 (for the fiscal year of 2021)
Year 2: If the next year we use it less than 31% (21% + 10%), then we don't have to pay anything. If our personal use is more than 31% then we will pay the difference (e.g since we already payed 21%, if we used it 35%, we would pay 35%-21% = 14% of initial $45000).
If we use more than 50%, then it's a change of use and we need to pay 100% of GST (or what remains). At the price of initial calculation ($45k) if it's a mix of residential and commercial.
Note: if more than 90% of the building is commercial, the GST we have to pay back is based on a "fair-value" evaluation of the current building price. Most places in phase 1 are less than 90% commercial (In our building, there are 130 units, as long as there are more than 13 units not available in the rental pool, it is considered less than 90% commercial).
Change of use: if we decide to stop renting (or less than 50%) and change the use we will have to pay the full GST back. We then have up to 4 years to decide to rent it again and claim the GST back.
When we sell, either we paid the entire GST and it becomes GST free; or we didn't and we can claim it back and the next owner will owe it.
Friends coming for free count toward personal use. One way to circle around is to charge the GST based on the market value for a night (and so, also PST and local tax).
Filing
To declare how much we rented or used personally, we have to count the nights we're renting and the nights where we occupy personally and provide the numbers to the CRA. The burden of proof is on us to show we're being honest.
GST filing is separate from personal tax filing but on the same calendar.