How to Qualify for the GST New Home Rebate
Taxes and homeownership costs are two expenses that can take a real chunk out of your budget. If you were one of the fortunate Canadians that bought a newly constructed home, you may be in luck. You could get a rebate on the GST or HST you paid when you bought your home.
When is GST / HST Charged on a Property Purchase?
If you bought a resale home, you do not have to pay GST or HST; however, newly built homes or homes sold after significant renovations are required to pay the GST/HST New Housing service tax; depending on the sale price, this can add thousands of dollars to the buyer’s purchase cost.
Fortunately, there’s some relief. Homebuyers who paid the GST/HST New Housing tax can apply for a rebate. In most cases, simply fill out a single form and you’ll be reimbursed thousands of dollars you paid when you first bought the home.
How is the GST/HST New Housing Tax Calculated?
Regardless of where you live in Canada, if you buy a newly built home, you’ll need to pay HST or GST on top of the purchase price. Exactly what you pay will depend on where you live.
Provinces, like Ontario and Nova Scotia, will require homebuyers to pay HST on their new home purchase, while provinces, like Alberta and Manitoba, will charge GST.
How is the GST/HST New Housing Tax Rebate Calculated?
If you live in a province that only charges GST, or charges GST and PST, you will be eligible for the GST New Housing Rebate.
If you live in a province that charges HST, you will be eligible for the federal portion of the HST as part of the GST/HST New Housing Rebate.
Keep in mind that the rebate does not mean a full reimbursement of the costs paid on a new construction home. In most cases, the maximum rebate will be 36% of the GST portion paid, up to a maximum of $6,300. buyers will receive approximately 36% of the total tax paid.
There are other restrictions. For instance, the federal rebate disappears entirely once the price of a new build is above $450,000.
In select provinces, there may be a provincial rebate, as well. However, to qualify for any new housing rebate, you must meet all conditions.
Eligibility Conditions for the New Housing Rebate
There are a few conditions and all must be met in order to be eligible for the GST/HST New Housing Rebate:
- The new housing rebate is only available to individuals. Corporations, businesses and partnerships are not eligible to apply. An individual homebuyer can lose their eligibility to claim the rebate, should they partner with a business to purchase a home.
- The purchased property must become the principal residence of the buyer. This does not mean the buyer can purchase the home as part of a plan to move into it at a later time, say in retirement. The home must become the buyer’s principal residence as soon as it is habitable.
- You are a Canadian resident.
- The sale price of the property purchased is no greater than $450,000. (Any property sold above this threshold may still qualify for a provincial if offered by the province.)
Can I Claim the GST Rebate for a Heavily Renovated House?
The GST new housing rebate is also open to those that purchased a heavily renovated home.
This rebate is also available to homeowners who purchase a resale home and then substantially renovate the property.
Substantial renovation means that more than 90% of the home’s interior is removed and replaced.
What About Home Constructed on Lease-Hold Land or Co-Op Shares?
Homebuyers are eligible to claim the rebate if the newly built or heavily renovated home that was bought stands on leased land, where the lease remains for 20 years or longer.
If the new home (or newly rebuilt home) is part of a cooperative housing unit, then the GST paid on the shares of this residential purchase would make the buyer entitled to the new housing GST rebate.
Determine the Right Rebate
There are two types of rebates when it comes to the new home tax rebate. One is for owner-built homes and the other is for buyers who purchase new build homes from a builder.
You qualify for the builder rebate if you are in the business of constructing or renovating homes for sale and at least one of the following conditions apply:
- You are the manufacturer or vendor of the new home;
- You bought the unoccupied home as a resale, but then undertook significant renovations;
- You helped complete the construction or renovation of the property;
- You converted a non-residential property into a residential property.
The vast majority of homebuyers will not qualify for the builder rebate. Instead, these buyers can apply for a rebate on new homes bought from builders as long as the property purchase meets one of the following criteria:
- You bought a new or substantially renovated house (building and land) from a builder
- You bought a new or substantially renovated mobile home or a new floating home from a builder (this includes the manufacturer or vendor);
- You purchased shares in a co-operative housing corporation (co-op) where the co-op has paid tax in respect of a new or substantially renovated house;
- You bought a new or substantially renovated home from a builder where you leased the land from that builder under the same agreement to buy the house and the lease is for 20 years or more or gives you the option to buy the land.
The amount of rebate you receive will also depend on the details of the purchase:
- You purchased both the property and the land it sits on;
- You purchased the property and leased the land it sits on;
- You purchased shares of co-operative housing.
Who Can Claim the GST/HST New Housing Rebate?
No matter where you live if you buy a new build or substantially constructed home, you can apply for the GST new housing rebate.
While the rebate is often used by first-time home buyers, it’s available to everyone—as long as they meet the eligibility requirements, as listed above.
How to Get Your New Housing GST/HST Rebate?
To apply for the rebate, you will need to submit Form GST191. You will not be required to submit supporting forms or receipts when you submit your application for a rebate. However, you should keep proof of occupancy and payments, in case you are asked to provide this information.
For provincial rebates, you will need to fill out additional forms. Find more details on the federal government’s site.
Is there a Deadline for Applying?
Homebuyers have up to two years from the ‘base date’—a term used by the Canada Revenue Agency to distinguish the first date of acquisition—to apply for the New Housing Rebate. Depending on the purchase details, this base date will differ.
For example, if you bought a new build home after it was built (or substantially renovated) then your base date is the date you moved in. However, if you bought a home before it was substantially renovated, then your base date to calculate the rebate deadline would either be the day you moved into the home or the day substantial rebuilds were complete.
When Will I Receive My GST Rebate?
In most cases, you will receive your rebate approximately six months after your rebate application.
What If You Bought a Home from a Builder that Didn’t Pay the GST?
Q: Hi, I’ve read that if I purchased a new home that I may be eligible for the GST rebate, but I’m concerned since I believe our home was built by a less than honourable builder. Plus, when I reviewed the contract, the HST we paid wasn’t declared—and the tax we paid is also not shown on the final invoice. Should I assume he paid tax and apply for the rebate? According to the laws in Ontario, he has to pay GST to the government if he earns more than $30,000 and my contract, alone was a total cost of $148,000?
— Deb L., Facebook
A: Deb, you will be relieved to learn that the Canada Revenue Agency (CRA) has no problem should you apply for the GST New Home Rebate. You won’t have to submit your contract or invoice, but you should keep this as proof of your purchase and payment of the tax.
Ideally, your invoice or contract shows a break-out of funds (labour, materials, GST, etc.)—even if it doesn’t show the total tax paid. However, if you do not have this documentation, and you are asked to provide proof, you may be denied the rebate.
NOTE: I am not an accountant or legal professional. For specific advice, please seek out the advice of a professional for your particular situation.
