What counts as real property
For GST/HST purposes, real property includes land, buildings and any interest in them, and the definition also names mobile homes and floating homes, although some rules treat those differently when they are not affixed to land. A lease or licence to use real property is treated as a supply of real property too. So the rules cover renting a shop as well as selling a building, and each supply is classified as either a sale or a lease, licence or similar arrangement.
The key question is then whether the supply is taxable or exempt. In Ontario, a taxable supply carries HST at 13%, but the rate is only one part of the analysis. The classification of the property and the seller come first.
Taxable and exempt in general
A sale of commercial real property is generally taxable, whether the property is new or used. Sales of newly constructed or substantially renovated residential property by a builder are generally taxable. Most sales of previously occupied residential housing are exempt, and so are long-term rentals of residential accommodation.
Most sales of real property by an individual or personal trust are also exempt, with exceptions, such as property that was capital property used primarily in a business. An individual who builds, renovates or buys a home for personal use, and not as a business, is generally not treated as a builder. Part-business use of a home does not necessarily change that, but a property that is not used primarily as a residence is treated as two separate properties on sale.
An illustrative example
Suppose an owner sells a three-storey building with shops on the ground floor and apartments above. Illustratively, the sale is treated as two supplies: the commercial part is generally taxable, and the residential part is generally exempt if it is previously occupied. If the residential part were newly built and sold by its builder, both parts would generally be taxable.
The numbers on the closing statement then depend on how the price is split between those parts. This example is illustrative only, and real transactions often involve rebates, self-assessment and other rules that change the outcome.
Common mistakes and what to discuss with your accountant
Common mistakes include assuming every property sale is exempt because the home was exempt, assuming a registrant selling commercial property can leave tax off, and treating a contract for construction services as a sale of real property. As a general rule, tax on a taxable sale of real property must be collected whether or not the seller is a registrant, though who collects and remits can depend on the circumstances.
Before signing, ask your accountant and lawyer how the property will be classified, who will collect and report the tax, whether you can claim input tax credits, and whether a rebate such as the new housing rebate might apply. Keep the agreement, closing statement and records of how the property was used.
Sources & editorial notes
Sources checked October 24, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.
- GST/HST Memorandum 19-1: Real Property and the GST/HSTCanada Revenue Agency
- GST/HST Memorandum 19-4-1: Commercial Real Property - Sales and RentalsCanada Revenue Agency
- GST/HST and home constructionCanada Revenue Agency
- GI-004 Sales by Individuals of Owner-Occupied HomesCanada Revenue Agency
- General information for GST/HST registrantsCanada Revenue Agency
Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.