Are you considering purchasing a newly built home, substantially renovating your home, or have already done so? If so, you may be entitled to a GST/HST rebate. The amount of this rebate will depend on the province in which the home is situated in.
What is the GST/HST New Housing Rebate?
The sale of a used residential home is exempt from GST/HST purposes and therefore, GST/HST is not added to the sales price when it is sold. However, the sale of a new residential home is taxable for GST/HST purposes and GST/HST must be added to the sales price. The GST/HST New Housing Rebate was created to offset some of the GST/HST charged on new homes to make them more affordable.
There is a federal and provincial component to this rebate. Currently, there are only two provinces that provide the New Housing Rebate on the provincial portion of the HST: Ontario and Nova Scotia.
The maximum federal rebate is currently $6,300. This rebate amount is maximized at a home price amount of $350,000 and is subsequently phased out to $nil for home prices between $350,000 and $450,000. There is no federal rebate for home prices greater than $450,000.
The maximum Ontario rebate is currently $24,000. The Ontario rebate is calculated as 75% of the Ontario portion of HST up to a maximum of $24,000 which is reached at a home price of $400,000. Unlike the federal rebate, there is no phase out of the Ontario program and home prices greater than $400,000 will still qualify for the maximum rebate of $24,000.
The maximum Nova Scotia rebate is currently $3,000. The rebate is 18.75% of the provincial portion of HST charged on the home price.
GST/HST New Housing Rebate Eligibility
Individuals that purchase a new home with the intent to use it as their primary place of residence qualify for the rebate.
For greater clarity, an individual can own more than one residence (e.g., a cottage and a house), but only one residence can be the primary place of residence. Some factors that are considered whether a house is a primary place of residence are:
Whether you consider the house as your main residence
The length of time you inhabit the premises
The designation of that address on personal and public records such as:
income tax (for example, forms or returns)
municipal or school taxes
Furthermore, the definition of a house may include dwellings such as a detached or semi-detached single-unit homes, a duplex, a condominium unit, a townhouse, a unit in a co-operative housing corporation, a mobile home and a floating home.
Nova Scotia’s rebate program also requires the house to be the first house you have purchased in Canada in the last five years to qualify.
Generally, the New Housing Rebate for the purchase of a new home is credited to the purchase price by the builder. However, if you are going through or have gone through a major renovation to your home, you may also qualify for the New Housing Rebate if the renovation meets the definition of a substantial renovation. A substantial renovation generally requires 90% or more of the interior of an existing house to be removed or replaced to meet the definition of substantially renovated. Usually, the homeowner would file the appropriate rebate applications in situations where there is a substantial renovation.
GST/HST New Housing Rebate Filing Deadline
The filing deadline for both the federal and provincial rebates is dependent on your situation but is generally two years from the date you occupy or take ownership of the residence. Late filed rebate applications will not be accepted except in extraordinary circumstances.
For more information, please contact firstname.lastname@example.org or 1 844-GYTD-CPA