Tax Implications of building a Laneway or Coach House



Aaah, taxes. Always more complicated than we think, or would like. Building or buying a home with a laneway house ? Sigh.  Best to check with the professionals (tax accountant, lawyer & Realtor) before you get going.

A laneway house is a small detached residential infill house that typically fronts on the lane of a larger principal house. 

If you own a principal residence and you hire a builder to build a new laneway house, then rent or lease the laneway home to a non-relative, the CRA considers you to be the builder, and to have:

* sold, repurchased, or “self-supplied” the laneway house at its fair market value;
* self-assessed and collected the GST on the sale; and
* paid the GST on the repurchase of the laneway house

This is just once scenario provided by the CRA, and it gets more complex from there. In for some bedtime reading ? You could read the CRA’s, "The HST/HST Implications of the Construction of Secondary Housing Unites (Laneway Housing)".

Did you know?

A laneway home can increase the value of a home. Building a laneway home:
* could affect your eligibility to claim the Home Owner Grant because of the increase in property value beyond the price thresholds; and
* may also result in increased property taxes.
* can affect a your principal residence exemption

It’s important for property owners to understand their options before building a laneway house or buying a property with a laneway house. Get professional advice first !


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