SUBSTANTIAL RENOVATIONS

Renovated to the studs? The HST may be recoverable.

If you gutted a home and rebuilt it, the tax authorities may treat what you did as building a new house — which makes the GST/HST on the work claimable.

The threshold is high and the test is specific. Most renovations don’t meet it. The ones that do are often worth a great deal, and are often never claimed because the owner assumed a renovation couldn’t qualify.

2,500 claims filed · $65 million recovered · 15+ years in Excise Tax · Never a percentage of your rebate.

The 90% Test

A renovation qualifies as substantial when substantially all of the interior of the existing building has been removed or replaced — generally understood as 90% or more.

Two things about that make it less forbidding than it sounds.

You don’t have to replace the structure. Foundation, exterior walls, interior supporting walls, floors, roof and staircases can all remain — and they’re excluded from the calculation entirely. The test looks at the interior you did have to deal with.

The comparison is to the building as it was, not to some ideal. If the house had five rooms and you took all five back to the studs, you’re in different territory from someone who did a kitchen and two bathrooms.

The 90% test is a question of fact and degree. It is not a percentage of your budget, not a percentage of your floor area, and not a matter of how disruptive the work felt. It’s a specific measurement against a specific thing.

Three routes in

Substantial renovation — 90% or more of the interior removed or replaced
Major addition — work so significant that, together with renovation, it creates what is in effect a new home. The CRA's framing turns on whether the addition roughly doubles the living area, and whether the result is genuinely a new house rather than an enlarged old one.
Conversion — a non-residential building turned into a home. A converted warehouse, church, school or commercial unit is new housing for these purposes.

This is the category most often got wrong

Substantial renovation claims are denied more often than any other rebate we handle, and the reasons are consistent.

The 90% figure is asserted rather than demonstrated. “We gutted the whole place” is a description, not evidence. The CRA wants to see what was removed, room by room.

Photographs weren’t taken. Mid-demolition photographs are the single most useful record in a substantial renovation claim, and almost nobody thinks to take them. If your project is underway, photograph everything now.

Invoices don’t distinguish the work. A contractor invoice reading “renovation — $180,000” tells the CRA nothing about scope. Itemised invoices win claims.

The owner filed before the test was met. People sometimes file on a large renovation that genuinely doesn’t reach the threshold, get denied, and conclude the rebate doesn’t exist. It does — for the projects that meet it.

If yours was denied and you believe the test was met, that decision can be challenged. How objections work →

The enhanced rebate applies here too

A substantially renovated home is treated as new housing, which means it can access Ontario’s enhanced rebate — up to $130,000, on the same value scale as a newly built home.

The timing conditions run on construction dates rather than any agreement, in the same way as an owner-built home. When the work began and when it was substantially completed both matter.

See the enhanced rebate →
How owner-built claims work →

What we do

We tell you whether you meet the test. Free, and honestly. Substantial renovation is the area where we most often tell people the answer is no — and it’s better to hear that from us than from the CRA eighteen months later.
We build the claim. Documenting scope, itemising invoices, completing the GST191-WS, supporting the fair market value, and assembling the whole package.
We deal with the CRA. These get reviewed. If yours is reviewed, we respond. If it’s denied, we file the Notice of Objection and represent you through it — same engagement, not a separate bill.

A flat fee. Not a percentage.

Most firms take a cut of what you recover. We charge a flat professional fee, quoted before you commit and charged when we file.

Substantial renovation claims are document-intensive, so we quote on scope. Your initial assessment is free, and if we don’t believe you meet the test we’ll tell you at that stage and you pay nothing.

If the CRA ultimately denies your application and all appeals or opportunities for reconsideration have been exhausted or are no longer available, our engagement agreement provides for a refund of our fee, less any out-of-pocket expenses, itemised in writing.

Michael Sproule has spent 15+ years dealing with the CRA on GST/HST matters specifically — not general accounting practice. Excise Tax is the whole of what this firm does.

Common Questions

I spent $300,000. Doesn't that make it substantial?

Not by itself. The test measures how much of the interior was removed or replaced, not how much was spent. A very expensive kitchen and bathroom renovation can fall short, while a more modest gut of an entire small house can qualify.

Do I have to replace the foundation and exterior walls?

No — and this is the most useful thing to know about the test. Foundation, exterior walls, interior supporting walls, floors, roof and staircases can all stay, and they’re excluded from the calculation.

Does a big addition qualify on its own?

Generally not. An addition can qualify where the work is so significant that the result is in effect a new home — the CRA’s framing turns on roughly doubling the living area. A second storey by itself usually isn’t enough; a second storey plus a full interior rebuild may be.

We converted a commercial building into a residence. Does that count?

Yes. Converting a non-residential building into a home is treated as new housing for rebate purposes.

My renovation is happening right now. What should I be doing?

Photograph everything, especially mid-demolition, and ask your contractors for itemised invoices rather than lump sums. Those two habits are worth more to a future claim than anything else you can do, and neither costs you anything.

My claim was denied. Is that final?

No. You have 90 days from the notice of assessment to file a Notice of Objection. Substantial renovation denials turn on judgement about scope, which makes them among the more challengeable decisions the CRA makes.

Renovating now? Take photographs.

If your project is underway, the records you keep over the next few months determine what you can claim later. A short conversation now is worth more than any amount of reconstruction afterwards.

Free assessment. Flat fee, quoted upfront and charged at filing. If you don’t have a claim, we’ll tell you.

This page describes the GST/HST new housing rebate for substantially renovated homes in general terms as of August 2026 and is not tax advice. Whether a renovation is substantial is a question of fact in each case. For CRA source material see Guide RC4028.