Many real estate investors in Ontario have been leaving money on the table, often not becoming aware of their blunder until well after the fact. That needn\u2019t be the case, though.<\/p>\n
Investors are entitled to the\u00a0 (New Residential Rental Property Rebate), for which they must apply within two years, if their unit is leased out for one year. Sounds simple, right?<\/p>\n
\u201cThere are a number of people who call me two years afterwards and say they wish they knew about it, and it happens more in the rental market than the build market,\u201d said Michael Sproule, principal of\u00a0Sproule & Associates<\/a>. \u201cAbout 25% of them don\u2019t take advantage of the rebate, or they don\u2019t file correctly, or they wait too long, or they don\u2019t have the proper terms and agreements.\u201d<\/p>\n In order to obtain the rebate, a Statement of Adjustment and a rental agreement for one year are required as proof. Sproule added that the latter is imperative, but many investors are either unaware of the stipulation or they make a critical error in judgement.<\/p>\n \u201cThe renter of the property has to have a one-year rental agreement with you, and if you do not have a one-year agreement you will not get your rebate back,\u201d said Sproule, who warned about another frequent mistake.<\/p>\n \u201cSometimes, the builder or developer says, \u2018We\u2019ll sell you a condominium and once you close we will find you the tenant,\u2019 and in those situations, you will not qualify for the rebate because, the way the CRA interprets it, that\u2019s an arm\u2019s length arrangement integral to the purchase of the property.\u201d<\/p>\n If an end-user is purchasing the property, they\u2019re eligible for the\u00a0 rebate\u2014which the developer holds back on the property buyer\u2019s behalf, unlike the investor who pays it upfront\u2014through the New Home Rebate, but what if circumstances change\u2014as they often do in the half-decade between purchasing and closing?<\/p>\n