Did you know that you may be eligible for housing rebates on the goods and services tax (GST) or harmonized sales tax (HST) paid for your newly built home? If you recently purchased a new home within the past two years, you may qualify.
If you purchased a newly constructed home or residential condominium unit, if you built or substantially renovated your own house, or had the work completed by someone else, such as a contractor, you can apply.
What Is the Harmonized Sales Tax as it Relates to New Homes?
HST is the blended federal and provincial tax paid on the purchase price of your new home or condominium.
When you buy a new-build home, build or substantially renovate your home, you pay this blended tax on the goods and services, and materials used to build the home, in the same way, you pay it on other goods and services. In Ontario, HST adds 13% to a purchase – 5% for the federal tax portion and 8% for the Ontario provincial tax portion.
Because of the tax, it increases the overall cost of what you have to pay to build or purchase your home.
The GST/HST new housing rebate aims to help home buyers, make housing more affordable by offering an HST rebate on a portion of the tax paid. Home buyers can take back some of the provincial and federal parts of the tax.
How Does the Rebate Work?
When you purchase a residential home or condominium from a builder, you pay HST on it and may be entitled to a rebate of the HST paid. The home must be intended to be your primary place of residence at the time of closing.
Depending on your province and other requirements, you may qualify for a provincial rebate, a federal rebate, or both.
The federal portion is based on the fair market value (FMV) of your home at the time of closing or completion and allows you to claim 36% of the GST. if your home is valued at $350,000 or less, you would qualify for a rebate of $6,300. If the value of the house is between $350,000 and $450,000, the rebate is prorated until reaches nothing at a value of $450,000.
The Ontario new housing rebate allows you to claim up to 75% of the provincial portion of the HST to a maximum of $16,000. The Ontario rebate is calculated based on what you spend on buying or building the home, not the fair market value. The Ontario rebate also provides for an additional rebate of up to $8,000 if the homeowner paid HST on the purchase of the land the house was built on.
Who Is Eligible For The GST/HST New Housing Rebate?
In most instances, builders build the value of the rebate into the list price of new homes. At the time of closing the home buyer will assign the value of the HST rebate to the builder who will take it as a credit HST owing. In some instances, a builder may not take the HST assignment and the purchaser will need to pay the full price at the time of closing. If situations such as these, you can apply to claim the HST housing rebate.
As mentioned earlier, those who bought a newly built home or condominium unit may be eligible, but there are other cases that qualify, such as in the case of owner-built houses. Costs from adding a major addition to your home, completing a substantial renovation, or rebuilding after your home was destroyed all may qualify for a housing HST rebate. Converting a non-residential property into a home will also count.
Finally, buying shares in a newly constructed cooperative housing project can qualify.
Keep all receipts for any renovations, and housing purchases.
Substantially Renovated House
For major renovations, additions or rebuilds to qualify, your home must be classified as substantially renovated. This means 90% of the interior space must be reworked; additions must at least double the living space.
GST New Residential Rental Property Rebate (NRRP)
There is also an Ontario NRRP rebate for those who bought a newly-built house or condo and will use it as a residential rental property, or investment property.
Apply For Your Rebate
The HST rebate is not automatic – you do have to apply for it. You have up to two years to submit your housing rebate application. It may take up to six months for you to receive the rebate.
Sproule + Associates helps home buyers with their rebate application for their GST/HST New Housing Rebate that they are owed. We will handle your paperwork and submit it for you, or guide you on why you may not be eligible for the new housing HST rebate.
We will also represent you when dealing with the Canada Revenue Agency, so you do not have to deal with any extra stress or worry.