GST on commercial real estate: taxable, registered buyers self assess

Who accounts for the GST/HST on a commercial property sale?

The CRA's position is that a sale of commercial real property is generally taxable whether the property is new or used canada.ca. That is the big difference from housing, where a used home is usually exempt (see GST on residential real estate). The question on a commercial deal is rarely whether tax applies. It's who pays it to the CRA.

The rule comes from subsection 221(2): a seller of taxable real property is not required to collect the tax when the seller is a non resident, when the buyer is registered (unless the buyer is an individual and the property is a residential complex), or when the buyer is a prescribed recipient laws-lois.justice.gc.ca. Subsection 228(4) then makes the buyer pay the tax directly laws-lois.justice.gc.ca.

The rate follows the province where the property sits: 5% GST in Alberta, British Columbia, Manitoba, Quebec, Saskatchewan and the territories, 13% HST in Ontario, 14% in Nova Scotia since April 1, 2025, and 15% in New Brunswick, Newfoundland and Labrador and Prince Edward Island canada.ca.

One $2,000,000 Ontario building costs four buyers between $0 and $260,000 of HST

Take a commercial building in Ontario sold for $2,000,000, land included, by a registered corporation. HST at 13% is $260,000. What happens to that $260,000 depends entirely on the buyer.

The fully commercial buyer reports the $260,000 on line 205, which applies when a registrant buys taxable real property, has to pay the tax directly, and will use or supply it more than 50% commercially canada.ca. It claims the input tax credit on line 106, which is limited to the extent the property is used in commercial activities canada.ca, so for this buyer the cash nets to zero on the same period's return.

The dental corporation is the case that costs money. It is registered, so the seller still collects nothing, but its commercial use is 50% or less, so the tax goes on Form GST60 and is paid in cash. Its ITC is $260,000 × 30% = $78,000, leaving $182,000 as a real cost. The unregistered holding company pays the full $260,000 to the seller with no way to recover it.

When is the self assessed tax due?

Tax on a sale of real property becomes payable on the earlier of the day ownership transfers and the day possession transfers under the agreement laws-lois.justice.gc.ca. The due date then depends on the buyer's use. A registrant using the property primarily in commercial activities reports the tax on or before the due date of its return for the period in which the tax became payable. Every other buyer pays by the end of the month after the month the tax became payable, using a prescribed return laws-lois.justice.gc.ca.

That prescribed return is Form GST60, the GST/HST Return for Purchase of Real Property or Carbon Emission Allowances, which the CRA describes as the return to report and pay GST/HST when you purchase taxable real property canada.ca.

Worked example: the buyer takes possession on June 1, 2026 and title transfers on June 15. The tax becomes payable June 1, the earlier date. A quarterly filer using the property more than 50% commercially reports it on the April to June return, due July 31, 2026. A buyer filing Form GST60 owes it by the end of July, also July 31, 2026. A late possession date can push the self assessment into the next period, so match the date to the agreement, not the registration of title. The return due dates are on our GST filing deadline page.

When is a commercial property sale exempt?

Most real property exemptions sit in Schedule V, Part I, and the one that matters for commercial property is section 9(2): a sale by an individual or a personal trust is exempt laws-lois.justice.gc.ca. The exceptions take most business owners back out of it. The sale is taxable when the property is capital property used primarily in a business carried on with a reasonable expectation of profit, or, for a registrant, primarily in making taxable leases of it. It's also taxable when the sale is made in the course of a business, when the land is part of a parcel the seller subdivided (a single split into two parts can still qualify), or when the property is a residential complex laws-lois.justice.gc.ca.

An individual selling property in an adventure or concern in the nature of trade can elect to make the sale taxable on Form GST22, filed before the supply, but the election isn't available for a sale on account of capital canada.ca.

Mixed use buildings are split. A property used partly for commercial and partly for residential purposes is treated as two separate supplies, and only the commercial part follows the commercial rules canada.ca. On a used building with stores below and apartments above, the apartments can be exempt while the stores are taxable, so the purchase price needs a reasonable allocation.

Two other points from the CRA memorandum: an assignment of a leasehold interest is treated as a sale of real property, and when the building is sold with a business, the parties may be able to elect no tax under subsection 167(1), though not when a registered seller sells to an unregistered buyer canada.ca. The election is on our GST44 section 167 election page.

Which mistakes leave the seller paying the tax?

The registrant exception only works if the buyer is actually registered. Every person who makes a taxable supply has to collect the tax as agent of the Crown under subsection 221(1) laws-lois.justice.gc.ca, and 221(2) excuses the seller only when the buyer is registered. If the buyer's number turns out to be invalid or belongs to a different entity, the seller is exposed for tax it never collected. Get the buyer's registration number and a warranty in the agreement, and check the number before closing using the GST number lookup.

Being unregistered doesn't save the seller either. The small supplier rule that keeps a non registrant's sales out of tax specifically excludes a supply by way of sale of real property laws-lois.justice.gc.ca. So an unregistered seller of taxable commercial property still collects from an unregistered buyer. That seller can then claim a rebate under subsection 257(1) equal to the lesser of the property's basic tax content and the tax payable on the sale, within two years after the day the consideration became due or was paid laws-lois.justice.gc.ca. The form is covered on our GST189 general rebate page.

A registered individual buying a residential complex, including the residential part of a mixed use building, falls outside the registrant exception, so the seller has to collect on that part laws-lois.justice.gc.ca.