If you have bought a newly built home or completed substantial renovations, and it is your primary residence, you may be eligible for the HST new housing rebate, whether you did the construction yourself, or had someone else do it. However, there are some common mistakes people make that affect their ability to claim the rebate or prevent them from getting the rebate at all. To help you avoid a costly error, we will discuss the most common mistakes.
What Is The HST New Housing Rebate?
You may not even be aware of the federal and Ontario HST rebate. When you purchase materials and services when substantially renovating or building your home, the Harmonized Sales Tax (HST), a combination of the federal Goods and Services Tax (GST) with the Ontario Provincial Sales Tax (PST), is charged. For more affordable housing, the government provides new housing rebates on the GST/HST paid. The federal rebate covers the federal portion of the tax, while the provincial rebate covers the provincial portion, or Ontario new housing rebate.
For it to be considered a substantial renovation, at least 90% of your home must be renovated. Rebuilding a home destroyed by fire, significant additions that double your space, or building conversions to make them habitable may also be included.
There are some requirements; the new or substantially renovated home needs to be your primary residence. For the Government of Canada rebate, which cannot exceed $6,300, the fair market value of your home must be under $450,000 in order to claim it. However, you can still claim the provincial (Ontario) PST part of the HST rebate on your new build or substantial renovation.
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.
HST New Housing Rebate Mistakes To Avoid
1. Forgetting To Claim or Not Knowing To Claim
It may seem obvious, but a common error is not claiming the HST rebate at all. Some home buyers are not familiar with the housing rebates, so simply do not know they can put in a rebate application. We estimate that less than 25% of homeowners that qualify for the rebate actually claim the new housing rebate. We have spoken with numerous homeowners over the years that have read the government documents and assume that because their home purchase price was over $450,000, that they cannot claim anything. However, the Ontario portion of the rebate, which cannot exceed $24,000, allows you to make a claim.
Although you have two years to submit your rebate application, don’t delay and risk missing the deadline.
2. Filing Your Rebate Late
If you want to ensure you receive your claim credit, you must act fast as you only have two years to submit your application. For example, if you finish building or renovating a Toronto home in April of 2022, you must file for your HST Rebate in Ontario by April of 2024.
3. Not Keeping All Receipts and Details For The Canada Revenue Agency
For owner-built new or substantially-renovated homes, a critical mistake is not keeping all your relevant receipts and keeping track of them. For your rebate application, you need to be able to identify clearly what each of the payments was for, who was paid, including business numbers, the total amount spent, when the amount was paid, and the HST amount paid. All this is set out in a table in the rebate application. Losing receipts or being unable to provide any of this information affects what you can claim.
4. The Rebate Calculation Is Incorrect
Again, it is crucial to ensure that all paperwork for rebates is accurate and complete. When you hire a tax expert who offers comprehensive services, you will have peace of mind knowing that your application will be correct the first time around. You also don’t have to worry about having to search for answers as to why your rebate was rejected – they will offer you an explanation and give you an accurate value of the rebate that you can expect.
5. If You Are Forced to Sell
To claim the HST rebate, you need to live in the house. While there is no time frame specified for the length of time you need to live in the house, the CRA may review your rebate if they believe that you are intentionally “flipping”. If you are forced to sell for some reason and are asked to pay back the HST rebate, you can appeal this decision.
Sproule + Associates can help you receive the maximum rebate possible, and help you with the rebate application process. We even represent you in any dealings with the Canada Revenue Agency. To see what you might be eligible to receive, check out our rebate calculation tool.