Unlike purchasing a resale condo, a pre-construction condo normally has two closing stages, we called it "interim occupancy" and "final closing".
During interim occupancy normally your monthly interim rental fee is significantly lower than what a mortgage would cost. The Condominium act explicitly outlines that developers are not able to make a profit through these fees. The fee helps the developer offset some final operational costs. The interim occupancy fees cover three main components:
Can you rent your unit during interim occupancy?
Technically speaking, during the interim occupancy you do not own the unit. Therefore, if you wish to lease during this stage, you’ll need get authorized the developer in writing.
It’s very important to note that if you do want to rent the unit, you’re telling the developer you will not be the principal resident and the property will serve as an investment property. Consequently, you won’t be eligible for the New Home Rebate and will be required to pay HST on top of your purchase price. That can add up to $24,000.
Don’t be scared, you can still receive the HST rebate even leasing your unit out. But you’ll have to pay HST upfront and you’ll be rebated around two months after you submit proof of a one-year lease agreement to CRA.
You can read more on the how HST Rebate works for end-users versus investors here.
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