Until July 2010 when the HST was introduced there wasn’t any GST on the purchase of new home. Buyers were only required to pay 5% PST (Provincial Sales Tax). Because of this big jump from 5% to 13%, the federal government rebates back to the buyers some (but not all) of the HST on new homes. When I say ‘new homes’ I’m talking about buying a house or condo unit from the builder or developer.
Who pays the HST?
Your first question to the builder should be, “Who is paying the HST?” Some builders pay it on your behalf and then claim the rebate. That makes sense. If you don’t pay the tax, you can’t claim the rebate, right?
Why don’t I get it all back?
Assuming you are paying the HST, a common question is, “Why don’t I get it all back?”
The rebate does not cover all tax costs and is capped at a maximum of $30,000.
It is important to note that the HST rebate varies depending on the price category of the home. There are online calculators that you can use.
How do you qualify for the rebate?
You are eligible for the rebate if:
- You are an end-user buying a pre-construction condo or house.
- You are an end-user buying a newly constructed home.
- You built a house or had a house built for you.
- You drastically renovated a home. At least 90% of the home must be replaced
- You will occupy the home for at least the first year.
Can investors qualify for the rebate?
Yes. All investors, including foreign buyers can receive the HST rebate. To qualify, investors are required to provide a one-year lease guarantee to prove that the newly built residence will be rented. It cannot be sold within its first year of ownership.
It is important to note though that the HST rebate is calculated differently for investors than for end-users. With end-users the GST rebate is calculated based on the amount of GST paid whereas for investors the GST rebate is calculated based on the value of property when title is transferred and ownership (not occupancy) is achieved. This often leads to a smaller rebate for investors