GST/HST New Housing Rebate for Houses Purchased from a Builder

It is well-known that builders market the purchase price of new homes as “inclusive of HST”. What often goes unmentioned is that the purchase price is inclusive of HST only to the extent that the purchaser qualifies for the GST/HST New Housing Rebate (the “New Housing Rebate”).  There are certain conditions that must be met in order to qualify for the New Housing Rebate.   In the event that you are not entitled to the New Housing Rebate, you pay a considerable amount of additional tax on your purchase.  We recommend that you fully consider the prerequisites of the New Housing Rebate prior to entering into any agreement to purchase a new home. 

Requirements for the New Housing Rebate 

Firstly, you have to buy a new home from a builder. “New home” means a newly constructed house and includes a detached or semi-detached single-unit house, a duplex, a residential condominium unit, a townhouse, a unit in a co-operative housing corporation, a mobile home, a modular home equipped with complete plumbing, and a floating home.  A “new home” may include nearby buildings or additions such as detached garage or shed.  

Secondly, you have to use the home as your or your relation’s (any individuals related to you by blood, marriage, common law or adoption) primary place of residence.  It should be clear at the outset of buying the new home that you or your relation will be using the new home as the only primary residence and inhabit the premises for a considerable length of time to designate the address of the new home on personal and public records.  If you purchase the new home to use it as your primary place of residence upon your retirement (i.e. at a future unknown date), the property is not considered to be your primary place of residence and you will not qualify for the New Housing Rebate.  
If more than one individual owns the home, only one individual can claim the rebate.  Note that the New Housing Rebate is available for individuals only, not corporations or partnerships. Currently, the maximum Ontario New Housing Rebate amount that is available is $24,000.  If the purchase price of the new home is $450,000 or more, you will not be entitled to claim the federal potion of the New Housing but you will be able to claim the provincial portion of the New Housing Rebate in the full amount of $24,000.  

This article was written by Samantha Ahn, a qualified real estate lawyer with SorbaraLAW.  Samantha can be reached at (519) 741-8010 ext.295.