When you buy a new or completely remodelled house, you’ll have to pay a sales tax on top of the purchase price, which includes a federal and a provincial portion that are kept separate in some jurisdictions but combined in others to be known as the Harmonized Sales Tax (HST).
The federal Goods and Services Tax (GST) portion, often known as the new housing rebate, may be claimed back. Rebates for the provincial component of the tax are available in certain jurisdictions.
Eligibility for the GST/HST New Housing Rebate
Depending on your situation and province, you may be entitled to a provincial or federal rebate or just the one. You may qualify for a rebate if any of the following are true:
- You bought a newly constructed or heavily renovated home for residential purposes that sits on purchased land or land leased for more than 20 years.
- You bought co-operative housing complex shares for residential use.
- The renovation of your home must have removed or replaced more than 90% of the interior.
The tax credit for qualified housing is available for a wide range of dwellings, including traditional houses and mobile homes that are used solely as residences. The discount isn’t accessible to corporations or partnerships.
You can receive a rebate for the GST or federal portion of HST if the property purchase price (without tax) is under $450,000. Even if the value exceeds this threshold, you may still be eligible to receive a rebate for the provincial portion from some provinces.
Types and Rates of Rebates
There are two types of rebates available, and the rates differ depending on if you’re an owner-builder or purchasing from a builder.
You may be considered a builder yourself if you’re in the business of constructing or renovating houses for sale, manufacturer or sell homes, bought an unoccupied house to resell, have helped with the construction or renovation of a property, or converted non-residential property to residential property, this is for you.
The term generally implies individuals who have a business interest in the land and have renovated, rebuilt, or acquired it for trade purposes. As a result, most people who acquire or rebuild their home to be their permanent residence will not be regarded as builders. Owners of owner-built houses can submit an application for the incentive.
The HST rebate is a tax credit available to individuals who purchase new housing in Canada. The federal government sets the rate that applies to each situation individually; however, most home-buyers will be eligible for one of three rates. For example, if you live outside of Toronto and buy a new house worth $400,000 or more, your calculator will calculate the rebate for construction purchases. This benefit applies to almost all home buyers.
- You purchased both the property and the land it sits on
- You purchased the property and leased the land it sits on
- You purchased a share of co-operative housing
How to Apply for the GST/HST New Housing Rebate
You must submit two forms submitted on the government’s website in order to apply for a rebate: one that demonstrates your rebate for GST, and the other an application form. In addition, you will need to complete an additional form if you live in a province that deducts some of the provincial taxes such as Ontario, British Columbia, Nova Scotia, or Saskatchewan. The paperwork should be sent to the specified tax locations on the government’s website.
No paperwork is necessary, but you may be asked to produce evidence of occupancy or invoices if so requested. After up to six months, you will receive your payment. Keep in mind that the application must be submitted within two years after the base date determined on the forms.
