HST on Blue Mountain Resort Chalets: What Buyers Need to Know When Purchasing Through a Corporation

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Buying a chalet at Blue Mountain Village can be an exciting investment opportunity, especially when the property is part of the resort’s rental-pool program. However, purchasers, especially corporate buyers, are often surprised to learn that HST may apply even on resale. This outcome depends entirely on how the property is classified under the Excise Tax Act (Canada) (“ETA”) and whether the unit is considered a residential complex or a commercial short-term accommodation unit.

At Rabideau Law, we regularly advise buyers, sellers, and developers on HST treatment of resort properties, rental pool arrangements, and mixed-use real estate. The Blue Mountain chalet market has its own unique structure, and understanding the HST rules can prevent costly surprises on closing.

1. Why Many Blue Mountain Chalets Are Not “Residential Complexes”

Under Schedule V, Part I, section 2 of the ETA, the sale of a used residential complex is normally exempt from HST. This is why regular resale homes and condos in Ontario are not subject to HST on the purchase price.

However, “residential complex” is defined very narrowly under ETA s. 123(1), and several exclusions apply. In particular:

A unit is not a residential complex if it forms part of a hotel, motel, inn, boarding house, lodging house, or similar premises that provides temporary or short-term accommodation to the public.

Blue Mountain chalets that are subject to mandatory participation in the resort rental pool, nightly rental management, and restrictions on owner use frequently fall into this excluded category.

Mandatory rental = Not a residential complex

CRA Policy Statement P-099R (“Hotel Condominium Units”) confirms:

Where condominium units are part of a hotel-type operation and must participate in a rental pool with centralized management, the sale of such a unit, including on resale, is a taxable supply, not an exempt residential sale.

This means the unit is legally treated as commercial lodging, not a home.

2. Why HST Applies on Resale in These Developments

If the unit is not a “residential complex,” then the default rule under ETA s. 165 applies:

All taxable supplies of real property are subject to HST at the applicable rate (13% in Ontario).

Therefore, in Blue Mountain developments where rental participation is mandatory (e.g., certain condo-hotel buildings or resort-managed chalets), HST is charged on the sale price,  even if:

  • it is not new construction;
  • the property has been previously occupied;
  • it is being resold by a non-builder;
  • the buyer is a corporation or an individual.

This catches many purchasers off guard because most Ontario residential resales are HST-exempt. Resort properties are a completely separate category.

3. Common Blue Mountain Indicators That Trigger HST

A chalet may be classified as commercial short-term accommodation if any of the following apply:

  • The unit must be placed in the resort’s rental pool, even if only for a minimum number of nights.
  • The resort controls nightly rental rates, housekeeping, and guest services.
  • The zoning is for transient accommodation, not long-term residential use.
  • The unit must meet resort furnishing, décor, and hotel-style standards.
  • The resort prohibits full-time or year-round owner residency.

In these cases, CRA considers the unit part of a hotel-type operation, not a residential property.

4. What Happens When a Corporation Purchases the Chalet

If a corporation purchases a mandatory-rental chalet:

HST is typically payable on the purchase price

The APS should specify whether the price is:

  • Plus HST,
  • HST included, or
  • Whether the buyer must self-assess under ETA s. 191 (rare but possible depending on past ownership).

The corporation may claim 100% Input Tax Credits (ITCs)

Because the chalet is used in a taxable commercial activity (short-term rentals < 30 days), the corporation can generally claim full ITCs for:

  • HST on the purchase price
  • HST on furniture, repairs, supplies, resort fees, and marketing
  • HST on property management services

This transforms what initially appears as an additional tax burden into a recoverable cost.

Registration for GST/HST is required

Before closing, the corporation should register for GST/HST to avoid timing delays and to ensure a clean ITC claim.

5. What About Owner Use?

Owner-use rights (e.g., 14 days per year) do not necessarily affect the commercial classification provided that rental participation is mandatory and the dominant use is short-term accommodation.

However:

  • If the owner begins using the unit primarily for personal use,
  • Or removes it from the rental pool (if even permitted),

then change-of-use rules may apply, triggering:

  • self-assessment of HST on fair market value (ETA s. 191),
  • loss of ITCs,
  • or the need to repay previous ITCs.

Proper structuring is essential.

6. Can HST Ever Be Avoided on These Units?

Yes, but only in limited scenarios:

  • If the seller previously self-assessed HST on a change-of-use and the unit is now used exclusively as commercial accommodation, the resale may be structured as HST included.
  • If the seller never claimed rebates or ITCs, the typical builder-style self-supply rules may already have been triggered.
  • Some APS contracts allow the purchaser to self-assess instead of paying HST to the seller, which improves cash flow and defers remittance.

Each development at Blue Mountain is different, and the APS language must be reviewed carefully.

7. Practical Guidance for Buyers

Before signing an APS for a Blue Mountain chalet, corporate buyers should:

1. Review the development’s rules

Determine whether the unit falls into:

  • residential,
  • mixed-use, or
  • commercial hotel-type classification.

2. Obtain the seller’s HST history

Ask:

  • Was HST paid on acquisition?
  • Were ITCs or rental rebates claimed?
  • Has the seller performed a self-assessment?

3. Register the corporation for HST

This ensures ITCs can be claimed and avoids unnecessary delays.

4. Confirm APS drafting

Ensure the HST clause is correct and protects the buyer.

5. Plan for cash-flow

If HST must be paid on closing, consider whether:

  • HST can be self-assessed instead; or
  • A holdback is appropriate if the seller’s HST position is uncertain.

Conclusion

Not all chalets at Blue Mountain are treated as residential properties. Where the unit must participate in the resort’s rental program, the CRA classifies it as commercial short-term accommodation, not a “residential complex.” As a result, HST applies even on resale, but corporate buyers can typically recover the entire amount through input tax credits.

Understanding these rules is crucial for avoiding unexpected tax liabilities and ensuring the transaction is structured efficiently.

If you are purchasing a resort property, whether at Blue Mountain or elsewhere in Ontario, Rabideau Law can review the agreement, identify HST risks, and structure the transaction to protect your interests and maximize recoverable tax benefits.