If you recently bought a newly constructed home, completed a substantial renovation, or are under contract to have a home built or do substantial completion of renovations, you may qualify for significant Goods and Services Tax (GST) and Harmonized Sales Tax (HST) rebates. Owner-built houses may also qualify if built on previously-owned or leased land. You can also qualify if you owned a non-residential property, and converted it into a home.
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What is a Substantial Renovation?
Generally, for substantially renovated housing, about 90% of the interior must be reworked. For costs from major additions to a house to be eligible, those additions must double the living space.
Fair Market Value (FMV) Impacts on Rebates
The GST rebate is a Federal rebate on the 5% GST tax home buyers pay for a new house or new condo, or for goods and services associated with building or substantially renovating a house. Owners can apply for a maximum rebate amount of 36% of the GST tax if the FMV is $350,000 or less. A partial GST rebate is available for homes between $350,000 and $450,000, up to $6,300. FMV is the highest price a property would bring in an open market between knowledgeable parties. It doesn’t include GST/HST or provincial land transfer taxes.
How to Calculate GST / HST New Housing Rebate
Varies by Province
The GST rebate is a Canada-wide federal portion of a rebate, with maximum refunds of 36%, up to $6,300. However, several provinces have an additional provincial portion, for PST and HST rebates, that vary across Canada.
Ontario has an HST of 13% (the federal GST portion of this being 5%); 8% is the Ontario portion, or provincial part, of the HST paid. The HST rebate is 75% of the provincial (PST) tax amount up to $24,000, if you paid HST on the purchased land, or $16,080 otherwise. Combined with the GST rebate, this can mean a total combined rebate of $30,194.
Nova Scotia offers a First-Time Home Buyers Rebate , up to a maximum of $3,000.
Saskatchewan’s PST is 6%. If the newly-built home value is under $350,000, you can receive a rebate of up to 42% of the PST. The rebate rate is reduced as the purchase price increases up to $450,000, after which there is no rebate.
Revenu Québec administers the GST/HST in Quebec. Their QST is 9.975%. If new houses purchased are less than $200,000, rebates of 50% of the QST result in refunds up to $9,975. The rate progressively declines until the purchase price reaches $300,000, after which no rebate applies.
Manitoba, New Brunswick, PEI, BC and NL have HST or PST on new homes, but don’t offer a PST or HST rebate for new homes. Alberta, Northwest Territories, Nunavut and Yukon have no provincial sales tax on new homes, so the federal GST portion applies only.
GST New Residential Rental Property Rebate (NRRP)
Ontario also offers an NRRP rebate for owners who purchase a newly-built house or condo and are planning to use the real estate for rental properties as an investment property. If you are planning to buy an investment property such as a recreational cottage in these provinces, you may be eligible.
Calculations
Check out Sproule + Associates’ GST Rebate calculator to see what you might receive. A GST rebate calculator provides estimates for planning purposes only. You can use the Canada Revenue Agency rebate application calculation system as well. If you’re eligible to claim the Ontario new housing rebate, fill out the Provincial Rebate Schedule Form RC7191-ON in addition to the federal rebate applications
How to Apply
You have up to two years to apply for new housing rebates; you must submit a calculation of your rebate for GST and an application form. Proof of occupancy may be required to show it’s your primary residence. You’ll receive payment within six months.
In 2021, changes were made to the GST/HST New Housing Rebate multiple buyers rules, such as when third-party purchasers were added to the agreement of purchase. This softens requirements when people might have been declined the HST new-home rebate because a mortgage lender required a third party to be added to the property title.
For new housing rebate forms and information on filling them out, see the Government of Canada website.
Let Sproule + Associates make your life easier by handling your housing rebate application. At Sproule + Associates, we commit to quality, professional advice and services that are personalized for you.
In addition to managing your New Home GST/HST claim, Sproule + Associates provide expert help with Excise Tax Act questions, or with an Owner-Built Home Rebate, NRRP, or a Substantially Renovated Home Rebate.
We look forward to getting you the full rebate you are owed.
