Do you feel a bit chilly these days?
It’s last week of August and we’re already at the low twenties.
Robin, my older kid, is counting down her days to start her Senior Kindergarten year. I hope she would still look forward to starting school when she gets older.
Bruce, my son, on the other hand, is still enjoying moment by moment.
If you haven’t noticed already, my husband and I are hosting Grant Cardone Nov 9 at Toronto Congress Centre. The theme of the event is to inspire fellow hardworking Canadians to take control of their finances, earn short-term cash flow and build long-term wealth.
This is a huge undertaking from personal time and money commitment.
As the worrier in the relationship, I seem to be the one that’s stressed out about this event most of the time. ?
Of course, it also shows in our weekly team meeting.
One day, our new marketing consultant made a comment this week at our meeting that resonated with me, ‘enjoy the process’.
I’ve been chewing on this comment for quite a few days, trying to take in every moment, bit by bit, learning from Bruce, my 4-year-old son.
For those of you who have not bought the tickets yet, our prices are going up after labour day. Make sure you get your tickets at Wealthhacker.ca.
Now onto this week’s topic…
A client of mine is preparing to purchase a mixed-use property.
Mixed-use property usually consists of a few residential units and a few commercial units that are rented out to businesses.
Whenever you buy a commercial property, chances are, the sellers would charge you HST on the purchase of commercial property unless you have a proper HST number provided to seller’s lawyer at closing.
If you do, you can get exempted for the HST amount. Instead, you will need to file your HST return telling the government that you purchased a commercial property, but you did not pay HST.
Now, technically speaking, you are not required to pay the HST if you continue to rent these commercial units out to commercial tenants.
But my client’s intention is to convert the currently vacant commercial unit to residential, rather than continuing on as commercial rentals.
When you convert a property from commercial to residential, there’s HST exposure on the conversion.
My client would have to pay HST on the conversion when the property is converted.
He can get exempted when he purchased the property with an HST number. At the conversion, he would have to pay HST on the fair market value of the commercial unit.
Ultimately, this scenario just goes to show how important it is to seek legal advice when purchasing commercial property.
Navigating commercial property law can be complex and therefore it is totally understandable if you start to feel overwhelmed by all the technical jargon involved.
In short, consulting commercial property solicitors in Yorkshire or commercial property experts wherever you might be based when buying a commercial property is strongly recommended to ensure that you can make the best possible choices.
Unfortunately, there is no way to avoid the HST when a conversion is done.
Until next time, enjoy the final days of summer!
Cherry Chan, CPA, CA
Your Real Estate Accountant
P.S. Don’t forget to visit Wealthhacker.ca to get your tickets before ticket prices go up after labour day!