HST Rebate Builder New Homes and Condos
HST Rebates for New Homes is available to buyers who are buying a new home from a builder or substantially renovating a home with the declared intention of making the new home or renovated home as their or their spouse’s (or common law partner’s) principal residence.
How is HST rebate builder new homes determined in Ontario?
Let’s take a look at how the amount of the Rebate is determined. The first thing to remember about the HST is that it is a tax comprised of both the federal government’s goods and services tax (GST at 5%) and the province’s provincial sales tax (PST at 8%). This is important because the Rebate itself is also the sum two amounts: the Ontario provincial government portion and the federal government portion, and both have different thresholds and mechanics.
The federal portion of the Rebate entitles the new home buyer up to 36% of GST if the new home costs $350,000 or less. If the home is more than $350,000 but not more than $450,000, the rate of the Rebate gradually decreases as the price of the home increases such that it becomes 0% when the price reaches $450,000.
The Ontario provincial portion of the Rebate can entitle a new home buyer up to 75% of the provincial taxes paid, up to a maximum of $24,000. While the federal portion ends when the purchase price is $450,000 or more, the provincial portion is still available even if the purchase exceeds that $450,000 mark until the amount of the Rebate maxes out at $24,000.
The HST Rebate is indeed a substantial saving for buyers of new homes or builder new condos or pre-constructions condos. But as pointed out above, the buyer must actually reside in the property or rent it out immediately after closing and submit proof of the residency or lease agreement to the Canada Revenue Agency (CRA). In most cases of new homes built by a builder, the Rebate is already factored into the purchase price and the buyer just signs a document assigning the Rebate to the builder. A buyer must thus be aware that he or she is qualified for the Rebate before applying for it because the consequence of disqualification is significant.
Where the CRA finds that a buyer did not reside in the new home or that the property was not leased out, it will demand the repayment of the Rebate plus interest years after the transaction. Where the CRA commences the action several years down the road, the interest on the repayment amount might balloon to a large amount. A buyer should be careful in understanding whether or not he or she is qualified for the Rebate.
Content Courtesy: Shaffiq Dar, Barrister & Solicitor, RealCorp Law Professional Corporation. Shaffiq Dar is an experienced and a trusted name for legal consultation regarding real estate transactions.