GST/HST New Housing Rebate

What this rebate applies to, and what it does not

GST and HST are charged on new housing. They are not charged on the resale of a used home. So this rebate only ever comes up on a new build, a substantial renovation, a major addition, or the conversion of a commercial building into a home.

If you are buying a resale house or a resale condo in Brampton, Mississauga or anywhere else in the GTA, there is no HST on the purchase price and there is no rebate to claim. That is the single most common misunderstanding about this program.

In Ontario the HST has a federal part and a provincial part. There are separate rebates for each, with different rules and different limits, and people frequently quote one when they mean the other. Any figure you are given should be checked against which part of the tax it refers to.

The property also has to be for use as a primary place of residence, by you or by a relation as the CRA defines that term. A property bought to rent out does not qualify for this rebate at all.

Buying from a builder, and why the rebate is usually invisible

This is the part that matters most for pre-construction buyers, and it explains a lot of confusion at closing.

When you buy a new home from a builder, you can assign the rebate to the builder. The builder then credits the rebate amount against what you owe on closing and claims it from the CRA themselves.

Because almost everyone does this, builders quote prices net of the rebate. The price on the agreement of purchase and sale already assumes you qualify and already assumes you have assigned the rebate to the builder.

That is why buyers often say they never received a rebate. They did receive it. It was taken off the price before they ever saw a number.

The consequence is uncomfortable but important. If you turn out not to qualify, the builder will require the credited amount back from you on closing, in cash, on top of everything else you owe. It is not written off. It becomes a line on your statement of adjustments.

The trap: buying new and then renting it out

This is where pre-construction buyers get hurt, and it is worth reading twice.

The new housing rebate requires that you or a relation intend to occupy the home as a primary place of residence. Intention is judged at the time of the agreement and at closing.

If you sign a pre-construction agreement, assign the rebate to the builder, and then decide to lease the unit out on closing instead of moving in, you were never entitled to the rebate. The builder discovers this at closing, removes the credit, and you owe the full amount in cash that day.

That has been a serious problem for GTA condo purchasers whose plans changed over the several years between signing and occupancy, which is a long time in anybody’s life.

There is a separate rebate for landlords, covering new residential rental property. It exists, but it works differently. It is not credited by the builder, you apply for it yourself after closing, and it has its own conditions and deadlines. Do not assume it simply replaces the other rebate on the same timeline.

If your plans for a pre-construction unit have changed, or might, raise it with your lawyer well before closing rather than on the day.

Owner-built homes and substantial renovations

The other half of the program covers people who did not buy a finished house from a builder.

• You built, or hired someone to build, a house on land you already owned or leased.
• You substantially renovated, or hired someone to substantially renovate, your existing house.
• You built a major addition as part of a renovation of your existing house.
• You converted a non-residential building into a house.

How the owner-built route differs

Nobody credits you anything. You pay the tax on materials and services as you go, and you apply to the CRA yourself afterwards on a different form, with a worksheet totalling the tax you actually paid.

That makes record-keeping the whole job. Every invoice for construction materials and contracted services is part of the claim. Receipts you cannot produce are rebate you cannot claim.

The deadline runs from completion and occupancy rather than from a closing date, and it is measured in years rather than months. Confirm the exact deadline early, because owner-built projects run long and this is the claim most often filed too late.

Substantial renovation has a technical meaning and it is a high bar. Broadly, all or substantially all of the interior of the existing building has to be removed or replaced, leaving the foundation, external walls, interior supporting walls, floors, roof and staircases. A kitchen and two bathrooms is a renovation. It is almost never a substantial renovation.

Because the test is a threshold rather than a sliding scale, a renovation either clears it or gets nothing. Confirm the CRA’s current guidance before assuming a project qualifies, and get it assessed before the work starts rather than after.

Two newer rebates that sit on top of this one

The base rebate described above is long-standing. Alongside it there are now additional measures aimed specifically at first-time buyers and at new housing in Ontario, and they are time-limited.

A federal first-time home buyers’ GST/HST rebate exists for eligible first-time buyers of new homes, with a much higher value ceiling than the base rebate and a strict window on when the agreement of purchase and sale was signed. It is administered by the CRA and it is separate from the base rebate.

Ontario has also introduced a temporary enhanced new housing rebate for the provincial part of the HST, again with a narrow window on the agreement date, a ceiling on the value of the home, and conditions about when construction starts and finishes.

Both are worth real money on a new GTA build and both are governed by dates rather than by circumstances. If you are buying new, the date on your agreement of purchase and sale may matter as much as the price.

Because these measures are recent and time-limited, treat any figure you read about them, including on this page, as needing confirmation. Check the CRA pages and speak to your real estate lawyer before relying on either.

How to apply

If you bought from a builder and assigned the rebate to them, you sign the builder’s rebate form as part of your closing package and your lawyer handles it. You do not file anything with the CRA.

If you bought from a builder and did not assign the rebate, you file the application yourself after closing, within a deadline measured from the closing date.

If you built or substantially renovated, you file the owner-built application with its worksheet, within a deadline measured from substantial completion and occupancy.

In Ontario there are additional provincial schedules filed alongside the federal application. Your lawyer or accountant will know which apply. Confirm the current form numbers, because they have changed as the newer rebates were added.

Keep everything. The CRA does audit these claims, and the burden of proving occupancy intent and tax paid sits with you.

What to check before you sign a new-build agreement

A short list for anyone buying pre-construction in the GTA.

• Ask whether the quoted price is net of the rebate. It usually is.
• Confirm what happens on closing if you do not qualify, and what the builder will charge back.
• Be honest with yourself about whether you will actually live there. If there is a real chance you will lease it out, say so to your lawyer before you sign.
• Note the date on the agreement of purchase and sale. The newer first-time buyer and Ontario rebates turn on it.
• If you are building or substantially renovating, start keeping invoices from day one and confirm the filing deadline at the start of the project.
• Have a real estate lawyer review the rebate clauses in the agreement. This is not a clause to skim.