If you built a new home as your main residence, or substantially renovated your home, you might qualify for the HST new housing rebate. Many people are not even aware of this rebate, while others wonder if there are any tips or tricks to maximizing what they can get back. Here are some helpful tips to ensure you get everything you are due and make the most of your rebate.
Background On The HST New Housing Rebate
When you build a new home or renovate one a great deal, Harmonized Sales Tax (HST) is charged. HST combines the federal government tax portion, or GST, with the Ontario Provincial Sales Tax (PST). To make housing more affordable, the Ontario and Canadian government offers housing rebates on this GST/HST paid.
To qualify for a substantial renovation, at least 90% of your home must be renovated. Rebuilding homes that have been destroyed by a fire, building significant additions that double your space, or converting buildings into a home are also eligible.
Other eligibility requirements apply, and fair market value can impact what you can expect to receive for your federal rebate. There are caps to the rebate amounts you can receive.
Residential Rental Property Rebate
You should be aware there is also an Ontario New Residential Rental Property Rebate which applies to rental property purchasers who purchase an investment property. Rental property rebates are discussed in our New Residential Rental Property Blog.
1. Know What You Can Include
Simply knowing what work, expenses, or purchases may be eligible will help make sure you maximize your tax rebates. If you built your own home or substantially renovated it in the last two years, or paid someone else to do it, you can make a claim. Likewise, if you converted a non-residential property into a home, built a major addition that doubled your space, or even rebuilt a home destroyed by fire, you may also be eligible.
If you purchased development land to build on, it may also increase your potential rebate.
2. Keep and Track Everything
If you built or renovated your home yourself, make sure to keep track of all potentially eligible expenses for reporting to the Canada Revenue Agency. Many people don’t keep every receipt or keep details with them, so when it comes time to complete the rebate application they may not be able to claim those costs. You need to provide complete details for these expenses on the application. Losing receipts or not having required details means those expenses won’t qualify.
3. Understand It Won't Impact Taxable Income or Tax Credits
If it is tax time, and you are wondering whether you need to strategize about applying for the HST rebate and whether it could impact the rest of your tax return, you can relax, as it won’t impact your return. If you receive interest from the CRA in the process of filing your rebate you will need to claim any interest income on your current year income taxes. You also don’t apply for it on your return; you need to fill out a New Housing Rebate Application form.
No Impact on Taxable Income
The HST Rebate does not impact your income for tax purposes; it is not considered passive or earned income, or capital gains, as it is a rebate on HST already paid when you purchased your newly built home or substantially renovated your home. This means that you don’t need to debate on whether to apply for the rebate as soon as possible or delay for a year (making sure you do apply before the two-year time limit is over), as it will not increase your tax payable.
4. Know Your Fair Market Value
For the federal portion of the new housing GST/HST rebate, the fair market value of your home at the time of closing is considered. If this value changes between the time you actually purchased the home and the date of closing, it can impact what you receive for your rebate. In the case of federal rebate, it can make a difference in whether you are eligible or not, if the value goes above the maximum threshold. Depending on your specific situation, the fair market value may increase or decrease what amount of rebate you receive. An HST calculator can clarify the impacts this may have.
5. Get Professional Help For This Tax Refund
Sproule + Associates helps new home buyers receive the maximum amount of HST rebate they are due; we can help you maximize your tax refund from this rebate. We are experts in this rebate, so can help you get the maximum rebate amount you are eligible for.