On April 17, 2024, the government announced an accelerated CCA rate of 10% (up from 4%) for new eligible purpose-built rental projects that begin construction on or after April 16, 2024 and before January 1, 2031 would be provided. Eligible property would be residential complexes with at least four private apartment units or 10 private rooms or suites. At least 90% of the units must be held for long-term rental. In addition,The April 17,2024 budget also proposed to expand the exemption from the excess interest and financing expenses limit (EIFEL). The EIFEL rules provide an exemption for interest and financing expenses incurred in respect of arm's length financing for certain public-private partnership infrastructure projects.

Budget 2024 proposes expanding this exemption to also include an elective exemption for certain interest and financing expenses incurred before January 1, 2036, in respect of arm's length financing used to build or acquire eligible purpose-built rental housing in Canada.

On September 14, 2023 the government announced it removing the Goods and Services Tax (GST) on new purpose-built rental housing in order to incentivize the construction of much-needed rental homes for Canadians.

The removal of GST will apply to new purpose-built rental housing, such as apartment buildings, student housing and senior residences built specifically for long-term rental accommodation.
The new rebate will be increased from 36 to 100 percent, allowing for a full recovery of the five percent federal GST (and the corresponding five percent federal component of the HST).

Importantly, the legislation will also remove the existing GST Rental Rebate phase-out thresholds for such purpose-built rental housing projects, which thresholds previously reduced and then eliminated the rebate for units with a fair market value of between $350,000 and $450,000.

The enhanced GST Rental Rebate will apply to projects that begin construction on or after Sept. 14, 2023, and on or before Dec. 31, 2030, and complete construction by Dec. 31, 2035. The enhanced GST Rental Rebate for purpose-built rental housing is immediately effective as of September 14, 2023, subject to the passage of implementing legislation.

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Consistent with eligibility under the temporary enhancement to the Goods and Services Tax (GST) New Residential Rental Property Rebate and the proposed Accelerated Capital Cost Allowance for Purpose-Built Rental Housing included in Budget 2024, eligible purpose-built rental housing would be a residential complex:

with at least four private apartment units (i.e., a unit with a private kitchen, bathroom, and living areas), or 10 private rooms or suites; and
in which at least 90 percent of residential units are held for long-term rental.

This change would apply to taxation years that begin on or after October 1, 2023 (i.e., consistent with broader EIFEL amendments).

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