Place of supply rules for real property

There is no change to the current place of supply rule for real property. A supply of real property is considered to be made in a province if the property is situated in the province.

Examples
A company based in Ontario sells one of its warehouses situated in Ontario to a company in British Columbia (BC). The supply of the warehouse is made in Ontario.The HST will apply at rate of 13%.

Under a lease agreement, a company in BC leases a commercial building situated in BC to a company in Ontario for a period of ten years. The lease of the real property is considered made in Canada since the real property is situated in Canada. Each lease interval is considered made in BC since the building is situated in that province. The HST will apply to each lease interval at a rate of 12%.

Supply of real property partly in a province

To determine whether the HST applies to a taxable supply of real property and at what rate, we have to determine where the real property is situated. The part of the real property that is situated in the particular province, and the part of the real property that is situated in the other province or outside Canada, are each considered to be a separate taxable supply made for a separate amount equal to the portion of the total amount for all the property that is reasonably attributable for each part of the real property. As a result, it is only the part of the real property that is situated in the participating provinces that will be subject to HST.

Example
A company in Quebec is selling a commercial building to an Ontario company. The building is situated in Ontario and Quebec. The part of the real property that is situated in Ontario and Quebec are each considered to be a separate taxable supply of real property for an amount equal to the portion of the total amount for all the property that is reasonably attributable for the part that is situated in each province. The sale of the part of the real property that is situated in Ontario is therefore made in Ontario and the HST will apply at a rate of 13%. The sale of the part of the real property that is situated in Quebec is therefore made in Quebec and GST will apply at a rate of 5%.

Note
Under the place of supply rules that determine whether a supply is made in a province, a floating home and a mobile home that is not affixed to land are each considered to be a good and not real property. For more information, see Place of supply rules for goods.

Forms and publications

• GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax - Place of supply rules for determining whether a supply is made in a province