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That’s because they didn’t read the fine print on the purchase agreement and they now have a problem that relates to the HST rebate that is available to buyers of new homes under certain conditions. Some investors who bought new homes or condos in the past few years planning to flip them in a hot Toronto market are facing HST bills of up to $30,000. New homes priced between $350,000 and $450,000, the rebate on the federal share of the HST rebate would be decreased proportionally.
Please see our legal disclaimer regarding the use of information on our site, and our Privacy Policy regarding information that may be collected from visitors to our site. The PiggyBank editorial team strives to provide you with accurate, up-to-date information that's useful in your personal finance journey. You could still receive a partial credit if your home has a fair market value equal to or less than $450,000. Yes, the Canada Revenue Agency will review your application for the HST rebate.
Does The Purchase Price Affect The Amount I Can Receive?
If you paid HST on the purchase of the land, you may qualify for a maximum of $24,000 in rebate. When buying from a builder, keep in mind that there is always HST to pay on new construction residential real estate. The good news is that there is also an HST “rebate” which is often factored into the purchase price.
Subsequently, the builder credits the purchaser with the amount of the rebate, if available, on closing. 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. When you purchase a newly built home or a new residential rental property, part of your budget will have to go towards the GST or HST 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.
How Much Is The GST / HST New Housing Rebate?
Consequently, people who purchase a brand new mobile home or modular home located on land that they rent or lease can still be granted a new housing HST refund. This means that recreational properties such as a cottage do not qualify for a tax refund. The federal government provides a 36% rebate on the first $350,000 of the purchase price. This rebate is phased out on a straight-line basis for homes priced between $350,000 to $450,000.
Purchased either a new home, substantially renovated a home or constructed a home. This could include a home on leased land, but only in the case the lease allows you to buy the land, or the lease agreement is for 20 years or more. Also, people who purchase a brand new mobile home located on land that they rent can still be granted a new housing HST refund. Eligibility for the provincial new home HST rebate in Ontario does not require you to own the land underneath your new property. Recreational properties like a cottage do not qualify for a tax refund or the HST rebate as it only applies to principal residences and rental properties.
HST in Canada
It must be used as a primary place of residence by either yourself or close family members . New home buyers can apply for a 75% rebate of the provincial portion of the HST applicable to the buying price to a maximum of $24,000. In this scenario, you will be required to pay the HST due, up front on closing (the built-in NHR rebate no longer applies), so this can add to your closing costs substantially. In the majority of cases, particularly when buying a pre-construction condo in the Greater Toronto Area , you’ll receive the HST rebate right away in the form of a discounted purchase price. Most condo and home developers already factor the HST rebate into their prices, so it’s built in.
You must have acquired shares in a newly built or substantially redecorated co-operative housing (co-op) project for residential purposes. You need to meet specific requirements before you can be eligible to claim the Ontario HST new housing rebate. The most important thing to know is that you need to acquire the property from a home contractor for this rebate.
In Ontario, the new home rebate applies to the HST paid in buying, building, or substantially renovating a house. You may be entitled to claim a portion of the provincial part of the HST that you paid. If it is an owner-built house or purchased from a builder, what you can claim as your rebate is capped at a maximum of $24,000. Purchase price of a re-sale property in Ontario includes HST, but, a purchase of a residential property from a builder may have additional HST implications. If you are purchasing a new residential property from a builder and you or your immediate family member intend to occupy it as your primary residence, you may qualify for an HST rebate. Typically, the New Home Rebate is assigned to the builder by the purchaser of the new home.
Check the following article for additional information about HST on new construction condos and homes. In response to the industry, the government offered a partial rebate of the provincial portion of the HST equal to 6% of the purchase price up to a maximum rebate of $24,000. This rebate is designed to reduce the impact of the tax on housing sold for a purchase price up to $400,000. New home buyers can apply for a 36% rebate of the federal portion of HST applicable to the purchase price to a maximum of $6,300 for homes costing $350,000 or less.
No rebate will be issued if the person living on the premises and is not closely related. If the applicant does not follow all the rules, the C.R.A will disallow the rebate. A tenant must sign a lease for the investment property before the owner can qualify. The Ontario NRRP Rebate is a rebate program offered by the CRA to purchasers of rental property. It can only be applied for by a purchaser after closing and only after the property has been rented out.
You are not required to submit any documents alongside your HST new housing rebate application, but you’ll need to submit invoices with your worksheet if the manufacturer did not replace the HST on the invoice. When applying for the HST new housing rebate application, you need to ensure that you meet all the requirements to start the application. Here, only parents, spouses, siblings, children are considered a direct relation. If you sell the property 12 months from closing, you will need to repay the total HST rebate value.
With regard to the lease or license of goods, including non-residential real property, HST will generally apply to lease intervals or payment periods on or after July 1, 2010 and the general rules noted above will apply. However, where a lease interval begins before July 2010 and ends before July 31, 2010, it is not subject to HST. GST and Commercial GST applies to most of the rentals of commerial real estate properties with limited exceptions. The Ontario new home HST rebate or NRRP Rebate must be filed within two years of a new home or condo closing.
So while HST is payable on your new construction condo, there is actually a credit already built into the purchase price which saves you from paying all or part of the HST due. And getting that credit is contingent on how you intend to use your new home. Generally, in Canada, an eligible new home buyer can receive a rebate for 36% of the federal portion of the HST paid on a new home, which constitutes 5% of the overall purchase price. For homes with a pre-tax price between $350,000 and $450,000, the federal HST rebate is gradually decreased, with no rebate available when the purchase price is over $450,000. There are many people in Ontario that are receiving demands from the Canada Revenue Agency to repay the HST new-home rebate they received upon closing on their real estate purchase.
Do I need to collect HST in Ontario?
This means that an individual who purchases a new condo to flip it for profit is not eligible for a rebate since the condominium was never intended to be their primary residence. The HST new housing rebate allows an individual to take back some of the federal part of the HST paid for a newly constructed or substantially redecorated house or condo for residential use, either by the buyer or their relatives. You can also claim the provincial part of the HST, whether the GST or federal portion is available or not. The rebate is also available for individuals who acquire newly constructed or substantially redecorated mobile and floating homes as a primary place of residence. You could claim the HST new rebate only if the property were built by the owner or purchased from a builder.
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