HST on commercial rent: what Ontario landlords need to know.

Updated October 3, 2026 · DF Property Management

The basic split

Commercial tenants who are themselves registrants can usually claim the HST they pay you as an input tax credit (ITC), so for most of them it isn't a real cost. Tenants that make exempt supplies — some medical and dental practices, financial services, charities — may not recover it fully, which is worth knowing when you negotiate rent.

When you must register

A landlord who rents commercial property is making taxable supplies and must register for GST/HST unless it is a small supplier. In general, you're a small supplier if your worldwide taxable supplies — together with those of associated persons — don't exceed $30,000 in a single calendar quarter or over the last four consecutive calendar quarters.

That threshold is low. One small commercial unit renting for $2,600 a month — $31,200 a year — is enough to cross it. Points to watch:

• Associated persons count. If you control several corporations that each own a property, their taxable supplies are combined for the threshold.
• Exempt residential rent doesn't count. An owner with only long-term residential tenants doesn't register because of rent, however large the building.
• Timing. Once you exceed the threshold, you have to register within a set period, and you may have to start charging HST from the supply that put you over. The CRA explains the rules for the single-quarter and four-quarter tests.
• Voluntary registration. A small supplier can register voluntarily — often sensible, because it lets you claim ITCs on the HST you pay for renovations, repairs and services for the commercial property.

What you charge and claim

1. Charge HST on all commercial rent. Base rent and additional rent, invoiced or set out in the lease with your HST number.
2. Claim ITCs on commercial costs. HST paid on repairs, management, utilities, snow removal and professional fees for the commercial property.
3. File returns on schedule. Most smaller landlords file annually or quarterly; the CRA assigns a reporting period based on revenue, and you can sometimes elect a more frequent one.
4. Remit the net. HST collected minus ITCs, by the return due date.

Mixed-use buildings

A building with a shop at grade and apartments above makes two kinds of supply: taxable commercial rent and exempt residential rent. The CRA treats the supply of each part as a separate supply.

• Charge HST only on the commercial rent.
• Claim ITCs in full on costs that relate only to the commercial unit (for example, a new storefront).
• Claim no ITCs on costs that relate only to the apartments.
• Apportion shared costs — the roof, common hydro, building insurance, management — on a reasonable basis, commonly floor area. Use the same method consistently and document it.

The rules for ITCs on capital real property (the building itself, major improvements) depend on the share of commercial use and on whether the owner is an individual, partnership or corporation. Changing the use of space — converting a store to an apartment, or the reverse — can trigger deemed sales and self-assessment. Talk to your accountant before you convert.

An example

An owner holds a two-storey building on the Danforth: a store at grade leased at $4,000 a month plus $1,200 of additional rent, and two apartments above. The commercial rent alone is $62,400 a year, well over the threshold, so the owner must be registered. Each month the store is invoiced $5,200 plus 13% HST — $676. The apartment rents carry no HST. When the storefront glazing is replaced, the HST on that invoice is claimable in full; when an apartment kitchen is renovated, none is; when the roof is replaced, the HST is apportioned — on floor area, the store might represent roughly a third of the building. These figures are illustrative only.

Parking and storage

Parking and storage supplied to a residential tenant as part of the residential tenancy generally follow the exempt treatment of the rent. Parking rented separately to people who aren't residential tenants — a common arrangement in Toronto buildings near transit — is generally taxable. Check your specific arrangements.

Selling commercial property

A sale of commercial real property is generally taxable. When the buyer is a GST/HST registrant, the buyer typically self-assesses the tax rather than paying it to the seller. Mixed-use sales are split between taxable and exempt portions. Your lawyer and accountant should address this in the agreement of purchase and sale.

Common mistakes

• Not registering after crossing the threshold — the landlord may then owe HST it never collected.
• Charging HST on base rent but forgetting additional rent.
• Claiming full ITCs on whole-building costs in a mixed-use property.
• Not rechecking the threshold after buying another property — a second small commercial unit can tip an owner over.
• Discounting rent to “absorb” HST for a tenant that would have recovered it in full as an input tax credit.
• Leases that are silent on HST — make sure every commercial lease says rent is exclusive of HST.

Lease and invoice wording

• State in every commercial lease that all rent, including additional rent, is exclusive of HST, and that the tenant pays HST on top.
• Show your HST registration number on invoices and rent statements.
• When you buy a building with existing leases, check whether the previous owner charged HST correctly and whether any lease is silent on it.
• Keep HST collected separate from rent in your books, so it isn't spent before it's remitted.

How we handle it

For managed commercial and mixed-use properties, we invoice HST correctly on base and additional rent, code every expense as commercial, residential or shared, and give your accountant a clean year-end package. See commercial property management, mixed-use building management and CAM reconciliation.

General information, not legal or tax advice. GST/HST rules for real property are detailed; confirm your situation on canada.ca and with a qualified accountant.