CRA GST/HST House Rental Conversion Audit — Montreal CPA Firm Near You: Defending Change-of-Use, Self-Assessment, and Rental Eligibility

A CRA GST/HST House Rental Conversion Audit examines whether GST/HST was properly handled when a residential property is converted into a rental property, or when a rental property is later converted to personal use, Airbnb, or commercial use.

These audits are extremely high-risk because CRA often asserts:
• GST/HST should have been self-assessed under s.191
• New Residential Rental Property Rebate (NRRPR) was incorrectly claimed
• Rental intention was not genuine
• Property lost its residential complex exemption due to short-term rental
• Reclassification triggers GST/HST on fair market value
• Mixed-use activity (long-term + Airbnb) requires GST/HST allocation

Mackisen CPA Montreal specializes in defending rental-conversion audits by reconstructing timeline of use, proving rental intention, calculating correct GST/HST amounts, and preparing CPA-certified audit binders that eliminate CRA assumptions.

Legal Foundation

• Excise Tax Act s.191 — GST/HST self-assessment required when converting new housing to rental use.

• Excise Tax Act s.256.2 — rules for the New Residential Rental Property Rebate (NRRPR).

• Excise Tax Act s.123(1) — definitions of “residential complex,” “builder,” “rental,” and “commercial activity.”

• Schedule V, Part I — exemptions for long-term residential rents.

• Case law:
  • Tarnowe — occupancy proof is essential.
  • Cheema — beneficial ownership determines tax liability.
  • Chella — intention controls GST/HST outcome.

Learning insight: CRA audits rental conversions because a single misstep can create large GST/HST liabilities, especially when property use is mixed or unclear.

Why CRA Audits Rental Conversions

CRA flags conversion files when it sees:
• rental rebate claimed but property appears owner-occupied
• property advertised on Airbnb before long-term rental
• long-term rental claimed without tenant proof
• quick change from rental → personal → rental
• mortgage declared as “owner-occupied” while claiming rental rebate
• no GST/HST self-assessment on new-build conversion
• rental income not matching CRA/Netfile/RENT reporting
• inconsistent addresses on IDs, insurance, or utilities

Learning insight: CRA assumes rental intention was not genuine unless fully documented.

CRA Rental Conversion Audit Process

1. CRA requests:
   – leases, ads, tenant applications
   – tenant IDs and contact info
   – Airbnb logs, booking calendars
   – hydro/utility usage
   – insurance (landlord vs homeowner)
   – mortgage documents
   – GST524 rebate forms
   – closing documents
   – bank deposit records

2. CRA rebuilds timeline of use:
   new build → occupancy (or not) → rental listing → rental occupancy

3. CRA tests:
   • Was rental intention real?
   • Was long-term rental actually achieved?
   • Was short-term rental predominant?
   • Was GST/HST self-assessment required?
   • Was the rebate (NRRPR) valid?

4. CRA issues proposed reassessment.

5. Mackisen CPA responds with a fully documented rental-conversion defense file.

Learning insight: CRA makes decisions based on timeline accuracy — this is the core of your defense.

Mackisen CPA’s Rental Conversion Defense Strategy

• reconstruct a precise timeline of rental and personal use
• prove long-term rental intention with ads, emails, agent correspondence
• document actual tenant occupancy (utilities, IDs, deposits)
• defend the rental rebate using CRA’s own eligibility criteria
• correct GST/HST self-assessment only if required
• isolate short-term rental periods from long-term residential activity
• prepare a CPA-certified audit binder with:
– timeline
– receipts
– rental proof
– legal analysis
• negotiate penalty removal where CRA overreaches

Learning insight: Rental conversion audits are won by proving the rental was real, long-term, and documented.

Common CRA Findings in Rental Conversion Audits

• rebate denied (NRRPR) because tenant did not occupy the property
• short-term rental activity (Airbnb) cancels long-term rental eligibility
• GST/HST self-assessment missing for new build → rental conversion
• CRA claims property was never really intended as rental
• GST/HST assessed on fair market value due to loss of exemption
• mixed-use allocation errors for long-term + short-term rental
• principal residence exemption denied
• missing documentation → CRA assumes commercial activity

Learning insight: CRA rulings are often based on incomplete evidence — you must supply the missing pieces.

Real-World Results

• A condo owner avoided a $72,000 GST reassessment after Mackisen CPA proved the rental was genuine and isolated minor Airbnb activity as transitional.
• A homeowner retained a $31,000 NRRPR rebate with reconstructed rental timeline, tenant proof, and corrected forms.
• An investor defeated CRA’s claim of commercial flipping by proving consistent rental intention and long-term tenant plans.
• A triplex operator reversed a large reassessment by properly allocating long-term rental vs commercial Airbnb units.

Learning insight: CRA backs down when your timeline + evidence + legal logic are stronger than their assumptions.

SEO Optimization & Educational Value

Primary keywords: GST/HST rental conversion audit, CRA long-term rental audit, rental rebate audit Montreal, Mackisen CPA
Secondary keywords: GST self-assessment rental, NRRPR audit, rental intention proof, Airbnb rental GST audit, CRA real estate reassessment

Learning insight: Strong rental-conversion guidance drives high search visibility and establishes credibility.

Why Mackisen CPA Montreal

With 35+ years of CRA real-estate audit defense, Mackisen CPA Montreal is Québec's #1 authority on rental conversion audits, rebates, builder classification, and change-of-use rules.
We specialize in preparing audit-ready timelines, reconstructing evidence, and challenging CRA's incorrect assumptions.

Learning insight: Rental conversion audits are won on documentation — we prepare flawless documentation.

Call to Action

If CRA is auditing your rental conversion, rental rebate, Airbnb use, or builder classification, get expert help immediately.

Contact Mackisen CPA Montreal for complete rental-conversion audit defense:
📞 514-276-0808
📧 info@mackisen.com
🌐 mackisen.com

Learning conclusion:

A CRA GST/HST House Rental Conversion Audit tests intent, use, occupancy, and GST/HST self-assessment compliance.
Mackisen CPA Montreal ensures every requirement is proven — protecting your rebate, your exemption, and your financial future.