CRA GST/HST Mixed-Use Property Audit — Montreal CPA Firm Near You: Defending Commercial–Residential Allocations and ITC Claims

A CRA GST/HST Mixed-Use Property Audit examines properties used partly for commercial activity (taxable) and partly for residential purposes (exempt). CRA audits these situations aggressively because GST/HST treatment depends entirely on accurate allocation, proper documentation, and correct tax logic under the Excise Tax Act.

Mixed-use audits commonly apply to:
• buildings with commercial ground floors + residential units above
• home-based businesses
• Airbnb + long-term rental combinations
• farmland with residential use
• commercial units converted to residential (or vice versa)
• multi-unit dwellings with partial commercial operations

Mackisen CPA Montreal specializes in defending mixed-use audits by reconstructing allocation percentages, reviewing zoning and usage patterns, correcting GST/HST filings, and building CPA-certified audit binders to neutralize CRA reassessments.

Legal Foundation

Excise Tax Act s.165 — GST/HST applies to taxable commercial portions.
Excise Tax Act s.169 — ITCs restricted for exempt residential use.
Excise Tax Act s.191 — self-assessment obligations for change-of-use.
Excise Tax Act s.123(1) — defines “commercial activity,” “residential complex,” and “exempt use.”
Case law: Royal Bank v. Canada — ITCs require clear commercial purpose and traceability.

Learning insight: Mixed-use property audits are allocation audits — accuracy and documentation determine everything.

Why CRA Audits Mixed-Use Properties

CRA flags mixed-use filings when it detects:
• ITCs claimed on residential-use areas (not allowed)
• GST/HST not charged on commercial leases
• home-office deductions unsupported
• Airbnb activity within primarily residential properties
• rental rebate claimed on property with commercial use
• incorrect allocation of renovation or repair costs
• change-of-use not self-assessed
• discrepancies between zoning, leases, and tax filings
• missing commercial-use evidence

Learning insight: CRA assumes ITCs were overclaimed unless the commercial use is proven precisely.

CRA Mixed-Use Property Audit Process

1. CRA requests:
   – leases, rent rolls, floor plans, zoning documents
   – utility bills
   – renovation invoices
   – advertising records
   – mortgage/insurance documents
   – Airbnb/short-term rental logs

2. CRA reconstructs use of the property and determines commercial vs residential percentages.

3. CRA tests ITC amounts for eligibility and proportionality.

4. CRA evaluates change-of-use rules and self-assessment obligations.

5. CRA issues a proposed reassessment.

6. Mackisen CPA prepares a detailed allocation defense.

Learning insight: CRA will only accept allocations backed by measurable data — square footage, usage logs, rent rolls.

Mackisen CPA’s Mixed-Use Property Defense Strategy

• create defensible square-footage allocation schedules
• rebuild commercial-use evidence (ads, contracts, invoices, customer logs)
• defend ITC claims with invoices + proof of payment
• prepare rental and commercial income reconciliation
• analyze zoning and municipal classifications
• correct GST/HST on commercial leases
• calculate self-assessment obligations (if any)
• prepare CPA-certified reporting binders tailored to CRA expectations

Learning insight: Allocations must be mathematically precise and documentation-backed.

Common CRA Findings in Mixed-Use Audits

• ITCs denied for residential-use portion
• home office too large or undocumented
• commercial leases missing GST/HST charges
• Airbnb activity reclassifying entire property
• renovation invoices applied 100% to ITCs when only partial commercial use existed
• incorrect classification of building as fully commercial or fully residential
• missing proof of commercial activity
• change-of-use self-assessment errors

Learning insight: CRA almost always assumes over-claimed ITCs — your CPA must prove the correct allocation.

Real-World Results

• A triplex owner avoided a $240,000 ITC denial when Mackisen CPA proved a defensible 33% commercial allocation using zoning, rent rolls, and floor plans.
• A home-based business reversed a $28,000 reassessment after we reconstructed business-use logs and corrected self-assessment entries.
• A mixed-use commercial building avoided a $380,000 GST bill when we documented the correct tax treatment of commercial and residential renovations.
• An Airbnb property kept its rental rebate when we isolated long-term rental activity and neutralized CRA’s mixed-use assumption.

Learning insight: Allocations require precision + narrative + evidence. We build all three.

SEO Optimization and Educational Value

Primary keywords: GST/HST mixed-use property audit, CRA mixed-use audit, Mackisen CPA Montreal, commercial residential building audit
Secondary keywords: ITC allocation audit, change-of-use GST audit, home office GST, Airbnb GST audit, allocation percentage CRA

Learning insight: Strong mixed-use tax education builds credibility — for CRA and online searchers.

Why Mackisen CPA Montreal

With 35+ years in real estate audit defense, Mackisen CPA Montreal is Québec’s authority on mixed-use GST/HST audits. Our bilingual CPAs understand allocation rules, documentation standards, and CRA audit methodology at an expert level.

Learning insight: Mixed-use audits are won by mathematics — and by perfect documentation.

Call to Action

If CRA is auditing your mixed-use property, home office, or commercial allocation, contact Mackisen CPA Montreal immediately.
Phone: 514-276-0808 | Email: info@mackisen.com | Website: mackisen.com

Learning conclusion: A CRA Mixed-Use Property Audit tests commercial vs residential use, documentation quality, and ITC accuracy. Mackisen CPA Montreal ensures your allocations are precise, defensible, and fully compliant — protecting your credits and your tax position