Have you purchased a new home? Has your house recently undergone major renovations? Have you purchased a newly constructed home and are wondering how applying for the HST Rebate in Ontario works?
Understanding how the New Housing Rebate works can be confusing, especially when it comes to determining if you’re eligible and who to go to for help, especially as first-time home buyers. That’s why we’re going to go over everything you need to know about how the GST/HST New Housing Rebate works, and what the maximum rebate amount you can receive is.
What Is The GST/HST New Housing Rebate?
When you purchase a newly built home or a new residential rental property, part of your budget will have to go towards the GST (goods and services tax) or HST (harmonized sales tax) on top of the purchase price, just like with everything else we purchase. There’s no escaping it, but fortunately, you may be eligible to receive some of that money back into your pockets.
Here are some terms you will need to meet in order to qualify for the rebate as well as the maximum amount you can receive back from the government.
Owner Built Homes
New Residential Rental Property
Again, a buyer can receive up to a maximum of $30,000 but you must plan on renting out the unit to tenants for at least one year. When you purchase a new residential rental property, you pay the full HST amount upfront unlike with a new build home purchase, so you will need to apply for the rebate with the CRA.
Substantially Renovated Home
If 90% or more of the habitable space of your house has been renovated, you can claim the GST/HST New Housing Rebate in Ontario. Calculations are based on the HST paid on materials, labour, and other invoices to a maximum of $16,080. It must be used as a primary place of residence by either yourself or close family members (children, parents or siblings).
If You're Buying A New Home From A Builder
When it comes to purchasing a newly built house, the builder will typically file a rebate application on your behalf. At the time of closing, you will “assign” the rebate amount to the builder which will reduce the HST paid and the price of your house. As such, you will not receive a rebate directly from the CRA. However, in order to be eligible for the rebate, you or a close family member must plan on living in the house. If it was purchased for investment purposes, you’ll be required to pay the HST in full and will need to apply for New Residential Rental Property Rebate once you have a tenant with a one-year lease. This will apply to condominiums as well.
Does The Purchase Price Affect The Amount I Can Receive?
This is one of the most popular questions we receive. Yes, fair market value (FMV) will come into play. At the time of closing, the builder’s solicitor will prepare a Statement of Adjustment which will calculate the HST Rebate that the purchaser will receive. The rebate amount is based upon the purchase price of the new property as well as the FMV of the property as calculated by the builder. For new builds, all builders calculate the FMV as the total list price minus the GST/HST. This amount is used by the builder to calculate the amount for the HST rebate. A residential property with an FMV of less than $350,000 qualifies for a maximum federal rebate of $6,300. A property with an FMV of more than $450,000 does not qualify for a federal rebate. A provincial rebate does not use FMV to calculate the amount. Investors will need to use the FMV at the time of closing when they file for the rental rebate, which could lead to a discrepancy in the amount that was paid at closing and the amount that is received from the CRA.
Were You Denied A Rebate?
Applying for the rebate yourself and dealing with the CRA can be a pain. That’s why Sproule + Associates is here to help. They may have turned you down for a variety of different reasons, but we can file a Notice of Objection for you and handle all communication with them.
Want To See The Maximum Amount You Can Qualify For?
Use our rebate calculator to determine how much you can receive for your new or substantially renovated house in Canada. If you need help applying for the GST/HST New Housing Rebate, or if you have any rebate questions, contact us today. Here at Sproule + Associates, we are committed to providing an exceptional experience to home buyers by treating them like family. Plus, we know how to navigate our way around the CRA so leave the hard work to us. All you have to do is wait for your rebate to arrive in the mail!