A February 2, 2026 Tax Court of Canada case considered whether spouses who repeatedly built and sold houses were builders and whether GST was applicable.
CRA had reassessed the taxpayers for GST of $22,875 for the March 2016 reporting period after they completed building and first occupied a house in British Columbia. The taxpayers had purchased seven houses and sold five (including building several houses on bare land) over an 11-year period (2010 to 2021).
The taxpayers argued that they were not builders and therefore did not have to remit GST on the use or sale of the property. Alternatively, if they were considered builders, they argued that the house was built primarily for their family’s residence, such that they qualified for the personal-use exception. This exception applies to individual taxpayers who are builders where the complex is primarily used as a place of residence by the taxpayer (or relative). The house cannot have been used primarily for any other purpose between substantial completion and primary use as the builder’s residence. If the taxpayers were builders, and the exception did not apply, they would have had to remit GST on the self-supply of the property when they first began to use it.
Taxpayers lose – builder
Emphasizing the frequency of similar transactions, the relatively short ownership and occupancy period, and the appellants’ familiarity with building and selling houses for profit, the court found that the taxpayers were builders. Although the taxpayers argued that they sold the house because the bedroom layout was unsuitable for their toddler, the court found the explanation unconvincing given their involvement in the construction.
Taxpayers lose – personal-use exception
The court then addressed the taxpayers’ argument that they should benefit from the personal-use exception. The court found that the taxpayers’ primary use of the house was as inventory to sell rather than for residential use. Their occupancy lacked the enduring quality associated with a genuine family residence and instead appeared incidental to a broader pattern of profitable development and sale. The court distinguished this situation from one in which resale was only a secondary intention and the taxpayer genuinely lived in the house. The brief residential occupancy did not overcome evidence that the house was primarily held for resale.
The court upheld CRA’s assessment of GST on their appraised valuation of $915,000, based on comparable sales and professional appraisal methodology.
ACTION: Repeatedly buying or building, briefly occupying, and then selling homes for profit may result in individuals being classified as builders, causing GST/HST to apply even in some cases where the properties were personally occupied.
