GST on Land Purchase? Weird Accounting Question

[eblend]

Hi All,

So as some of you know, I bought land last year where I am building the house. The land was $330k, and I verified with the realtor at that time that $330k is all in price, GST included.

Fast forward to today, I got a visit from the original seller and his son, who live a few blocks away. They came by and were asking me something about my GST number....I told them I have no idea what they are talking about. They said that their accounts are saying something about GST and that the realtor and the lawyer both missed something and that I will have to pay this GST at some point anyways. They are just as confused as I am, and basically said that I don't have to worry about paying the GST to them or anything like that, but that the government will come after me for it after I build the house on the land I purchased.

All of this sound very odd to me, and I was hoping someone could give some advise. I told the guys I would look into this....so here I am. The house I am building will be my primary residence once I move in if that makes any difference.

I found my txt chat and took a screenshot mentioning the GST:



And this is what the accountants wrote to the original owner. In this case, DAD is the original owner, and his son is trying to sort this out for him. Dad pays the GST would be the proper conclusion from this as that's how it was sold....unless I am completely confused on how these purchases work. Bought a few houses in my day, never had to do anything like this before..self report? Can someone make sense of this for me?



I have no intention of paying $15k for anything. If this was truly a mistake somewhere with realtor/lawyer...doesn't seem like my problem.

[ExtraSlow]

I would ask them to direct all inquiries to my lawyer. No way in hell I'd be dealing with them directly for this.

[Buster]

GST is remitted by sellers not buyers

[TomcoPDR]

Just from this info. Feels like sellers side assumed or treated you as a corporation with a GST number. (Ie. Since original gst was paid, and if it’s bought by another gst’ed corporation, there’s a gst indemnity form that lawyers should had caught, to the effects of forgoing physically handing over gst amount and the buying corp will just get it back thru input tax credits, just means a form saying buying corp will take gst responsibility should CRA deem the sale requires the taxman getting their cut).

And it feels like this is your personal residence use, under personal name. I think GST would be due… but from a legal perspective, GST remittance is responsiblity of the seller. So for sake of supporting a Beyonder, you might had saved yourself from paying GST… profit, best asset class ever

*disclaimer: I’m not a lawyer or an accountant. Just someone that wants some rep points. Do your own due diligence

[TomcoPDR]

Ohhhh (not familiar with raw land, and then finished with a residence)

From your info, maybe there’s two layers to this

- sold as raw land, left as raw land; seller (dad) pays gst

- if buyer ends up putting a residence on land (finished product); buyer needs to remit gst after build out?


Rep point given for juicy story for us to learn

[ExtraSlow]

Don't say a single thing to the seller. His problems are not your problems.

[TomcoPDR]

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Don't say a single thing to the seller. His problems are not your problems.

In OP’s post. It says seller is also living nearby and basically knocked on his door asking for gst number. Yeah, pretty sure seller’s team fucked up. I guess no more friendly rural drive by waves when eblend tells seller pound sand.

[gwill]

whats your realtor saying?

Main detail to consider here is you have a closed deal on an agreed upon price. The only thing that matters is your contract on the accepted offer.

If the sellers have an issue they should sue their listing realtor for screwing up.

How would they feel if you went and asked them for $10k cash back after the deal was closed?

[suntan]

Fiduciary duty.

[eblend]

Hi All, wow quick responses. Yah I looked at it myself a bit after I posted this, and yah, when the guys asked for my GST number, I said I that the only time I ever had a GST number was when I was incorporated, which I am not anymore, and this is a personal purchase. The names of the owners of the property are on the sale paperwork, so I was buying from a person, not a corporation, as a person.

Some digging seems to indicate that if it was a sale by a corp, they would have to remit GST, or if I was a corp I could remit GST and then get it back or whatever. There is also a provision that if the land was subdivided into more than 2 lots (it was, it's 5 lots now), then GST has to be paid by the seller on subsequent sales.

At any rate, I feel like their accountant is just trying to blame everyone else for something they agreed on. Doesn't the seller have a lawyer as well...would their lawyer catch it just the same, not sure why they seem to be blaming the realtor and my lawyer...

I haven't asked my realtor about this at all, but I will ask him on Monday to see what he says. They are nice people, and they came over only because I was there working away on the house. I hope this doesn't cause any friction between us. God knows they have the $15k spare, I am sure they are very well off with 2x more lots to sell. I will see what the realtor says. I don't really want to ask a lawyer for anything, as they will just want more money from me, when this isn't my problem, so it should cost me absolutely nothing. I paid $330k as agreed, I have the title, rest isn't my problem.

[eblend]

Decided to dig up the paperwork, and found this. Think that's all I need to show these guys for them to leave me alone:



I have a feeling it's their accountants trying to stir shit up when it doesn't exist. They seem like nice enough people.

[roopi]

Why does it say purchase price is $320 and then crossed out with a higher offer? Assuming the offer was $330 including GST and they added 2.2 and the seller didn't realize?

[eblend]

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Why does it say purchase price is $320 and then crossed out with a higher offer? Assuming the offer was $330 including GST and they added 2.2 and the seller didn't realize?

There was a mistake on the part of the realtor, the price discussed with me was always $330k. List price was $350k. I don't know or care really, this signed document by everyone proves I don't owe anyone nothing. I should note, the highlighting is done by me in Snipping Tool, it wasn't there on original paperwork. I just highlighted to direct attention to that line.

[eblend]

Decided to read messages from the realtor before what I posted earlier, and found this:



So seems like this GST stuff was explicitly brought up. Think they did their taxes and realized they had to pay $15k, and now trying to avoid paying them, at the advice of the accountants.

[Twin_Cam_Turbo]

It’s 100% the sellers issue now.

[gwill]

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Decided to dig up the paperwork, and found this. Think that's all I need to show these guys for them to leave me alone:



I have a feeling it's their accountants trying to stir shit up when it doesn't exist. They seem like nice enough people.

this Is all that matters. Ask them for some additional upgrades to the land that exceed the value of the gst and see what they say. It should end things pretty quickly.

[Buster]

I wish I had stupid counter-parties.

[suntan]

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I wish I had stupid counter-parties.

Even better than lemon parties.

[S-FLY]

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Decided to read messages from the realtor before what I posted earlier, and found this:



So seems like this GST stuff was explicitly brought up. Think they did their taxes and realized they had to pay $15k, and now trying to avoid paying them, at the advice of the accountants.

According to your realtor, when buying raw land, GST is usually the buyers problem?

[eblend]

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According to your realtor, when buying raw land, GST is usually the buyers problem?

Yah that's what it sounds like, which isn't something I seen anywhere when I did some looking, but either way, it's rolled into the price, so I paid GST to them in the form of it being included in the final price, so they can go ahead and remit that to the government.