If you’re considering buying a nightly rental property in Whistler you may have questions about how GST applies to your purchase. In this video, I’ll break down what you need to know, how to defer GST, and what percentage of commercial use impacts your GST tax obligations.
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Before we dive in, a quick disclaimer: I’m not a tax accountant. My name is Dean Linnell, and I’ve been a real estate agent here in Whistler, BC for 25 years with The Whistler Real Estate Company. The information I’m sharing comes from my trusted local accounting partners at BDO Dunwoody, who manage the Whistler tax accounts of many of my domestic and international clients. For a deeper dive, I’ve linked a helpful GST guide from BDO Dunwoody in the description below, along with their contact information.
GST on Commercial Property Purchases
When you purchase an existing commercial property — meaning one that’s been used for short-term rentals — the seller will confirm the property’s commercial use. As the buyer, you’ll have two options:
- Continue renting the property short-term and defer the GST.
- Stop renting and pay the GST upfront at closing.
This decision must be made before your completion date, because the seller’s lawyer will require either your GST Business Number (if you’re deferring) or your GST payment (if you’re paying upfront).
How to Defer GST
To defer GST, you’ll need to:
- Register for a GST account with the CRA.
- Operate the property commercially, meaning it must be available and rented for short-term stays.
The CRA has strict rules on how commercial versus personal use affects your GST status. Here’s how it breaks down:
- Over 90% Commercial Use: You can claim a full GST deferral.
- 80% Commercial Use, 20% Personal Use: You’ll need to repay 20% of the original GST deferred at the time of purchase. This is a one-time adjustment, and you can continue using it personally for up to 20% each year moving forward.
- Less than 50% Commercial Use: The property is considered primarily residential, and you’ll be required to repay 100% of the original GST that was deferred.
These percentages are calculated when you file your first GST return after the year of purchase.
How the CRA Calculates Usage
Prior to 2007, the calculation was simple: a 365-day calendar year. For example, 10% personal use equaled about 36.5 days of owner occupancy.
However, in 2007 the CRA clarified that vacant days no longer count as commercial use. Now the formula is based on actual rental and personal use days:
Personal Use % = Personal Use Days ÷ (Rental Nights + Personal Use Days)
This means that if your property sits empty and unrented, those days do not count toward your commercial use ratio.
You can still prepare your GST returns using a 365-day year, but if you’re ever audited, the CRA will recalculate using this updated method.
Final Thoughts
Understanding GST on commercial properties can be complex, but getting it right before you complete your purchase is critical. If you have questions specific to your situation, I highly recommend reaching out to BDO Dunwoody — ⬇️ Click below to download the BDO Dunwoody Whistler GST Guide for Buyers: https://bit.ly/GuidetoGST.
