New home buyers of a newly built home can benefit from the GST/HST new housing rebate. What’s more, even owners who recently completed a substantial renovation or built a new home may also be eligible.
What Is The GST/HST New Housing Rebate?
When you pay for a brand new home or certain renovations, you are charged the Harmonized Sales Tax (HST). The HST is a combination of a federal portion, or GST, and a provincial portion, which is the Ontario Provincial Sales Tax (PST). To make it easier for people to buy houses, both the Ontario and Canadian governments offer new housing rebates for the GST/HST paid. The Canadian government offers a federal rebate for the GST or a federal portion, and the Ontario government offers a provincial rebate for the PST portion.
The new housing HST rebate applies to a newly constructed home or substantially renovated house, whether you did the work or paid to have it done. For a substantial renovation, at least 90% of the home must be reworked. Substantially renovated housing includes a substantially renovated mobile home, condo, or other housing. An addition that at least doubles your living space is also eligible. As well, rebuilding homes destroyed by fire or converting a non-residential property into a home may be eligible.
How Can You Maximize The Benefit Of Your HST Rebate?
1. Keep All Receipts
Keep all of your receipts and track all of the details for them, so you have all the information you need to provide the Canada Revenue Agency, should you need to do so. For your housing rebate application, there is a worksheet, and you need to be able to specify details for each of the payments and receipts, including who was paid and when, business numbers, the amount spent, and the HST amount paid. Follow up with a vendor to get a receipt if you are not given one automatically, and keep everything in a safe place, as you will not be able to claim anything you do not have the documentation for.
2. Purchase Price and Fair Market Value
When calculating the federal portion of the new housing rebate, the fair market value (FMV) at closing is used. This applies to the federal rebate only. The FMV is the value of the home and any purchased land; it represents the price that is likely to be paid for that house, given the real estate market at the time. For the federal rebate, there is a cap of $450,000. Regardless of the purchase price of your home, if the FMV was above that, you would not be eligible for the rebate. The Ontario provincial portion is not affected by FMV, however, which is based on the purchase price for new homes, or the cost of the goods, services, and materials for owner-built homes or substantial renovations. For rental rebates, if your FMV changes from when you purchased the home and the closing date, it will impact the federal portion of the rebate. Knowing how price and value impact what rebate you might expect can inform your purchasing decisions better.
A new housing rebate calculator where you can put in the purchase price to get an estimated rebate calculation can clarify the impacts this may have.
3. Consider What Might Be Eligible Before Committing
Before starting renovations, an expansion, or even a new home build, make sure you know what work and materials are eligible, and what amount will be eligible. When planning substantial renovations, consider whether the renovation will meet the 90% rework requirement, or a major addition more than doubles the interior square footage of the existing dwelling, and consider options that could ensure the needed percentage is met.
An HST rebate calculator can help you plan.
4. Consider Appealing
If your claim was denied, you should know that you can appeal. A Notice of Objection can be filed. There are situations where you may have been denied but can appeal successfully. For example, to be eligible, it must be your principal residence, but there is no time frame for how long you have to live there. The aim of the rebate is to help home buyers afford a home, but not those who are flipping houses. If you have to sell your home and get denied, you can claim; in general, the rebate is supposed to err on the side of benefitting the homeowner.
5. Get Help With Your Housing Rebate Application
Applying for the GST/HST new housing rebate can be complicated. If the CRA has questions or declines your application, it can be stressful and time-consuming to appeal or communicate with them. Having a professional assist with your application and represent you for any dealings with the CRA makes the process easier, plus, since they are familiar with the process and all of the fine details about the new housing rebate, they can guide you to make sure you get the maximum rebate you can receive. They make sure you don’t miss anything, and if you aren’t eligible, they can clarify why not, so you are not left confused.
Sproule + Associates can help you receive the maximum HST rebate amount.
Residential Rental Property Rebate
There is also a Residential Rental Property Rebate for investors who buy an investment property to rent out. For this rebate, you must have bought the property as an investment, and you must have paid tenants living in the property for at least a year, or have a one-year lease. You or your close family cannot have lived on the property.