{"id":10109,"date":"2021-04-20T04:58:46","date_gmt":"2021-04-20T04:58:46","guid":{"rendered":"https:\/\/diamondlaw.ca\/?p=10109"},"modified":"2022-01-05T07:02:18","modified_gmt":"2022-01-05T07:02:18","slug":"how-does-the-hst-rebate-work-on-a-new-build","status":"publish","type":"post","link":"https:\/\/diamondlaw.ca\/real-estate\/how-hst-rebate-works-on-new-build\/","title":{"rendered":"How Does the HST Rebate Work on a New Build"},"content":{"rendered":"

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Being required to pay a Harmonized Sales Tax (HST) when you purchase a newly built home can be so troublesome. Most homebuyers are usually confused about the HST rebate, asking questions like \u201cHow does it work?\u201d, \u201cWho can benefit from it?\u201d and \u201cWho pays for it on new housing?\u201d\u00a0<\/span><\/p>\n

First, let\u2019s start by defining what an HST is. A Harmonized Sales Tax is what you pay on top of your purchase price when buying a new house or condominium. The HST is a combination of the provincial portion and federal portion. It was implemented in 2010, and it increases the tax on new homes from 5% to 13%.\u00a0<\/span><\/p>\n

Recently, the federal government introduced the HST rebate to relieve homeowners of the increased cost of buying a new house. With an HST rebate, new-house buyers can take back some of the provincial and federal parts of the HST.\u00a0<\/span><\/p>\n

If you plan to buy a new residential home or condominium, understanding what a rebate is and how it works is crucial. This article will discuss everything you should know about the HST rebate and how it works on a new build.<\/span><\/p>\n

What the New Housing HST Rebate is and How it Works<\/b><\/h2>\n

When you purchase a <\/span>residential home<\/span><\/a> or <\/span>condominium<\/span><\/a> from a builder, you may be entitled to the HST rebate. The program is officially called the Harmonized Sales (HS) Rebate, which contains two programs — the HST New Home Rebate and the HST New Residential Rental Property Rebate. The Canada Revenue Agency implemented the program to combine both the provincial (PST) and federal (GST) taxes. The HST amounts to 13% of the new property\u2019s purchase price.<\/span><\/p>\n

The way the HST is charged on a new property depends on whether you are buying the house for personal use or rental. Either way, the rebate is applicable in both cases.\u00a0<\/span><\/p>\n

Depending on your province and the property\u2019s condition, you might be eligible for the federal rebate, the province rebate, or both. However, the actual costs the purchaser needs to pay when <\/span>closing the property<\/span><\/a> and the method for claiming the rebate can differ significantly.<\/span><\/p>\n

The federal part of the HST rebate will let the homebuyer claim 36% of the GST if the home costs $350,000 or less. However, if the home costs between $350,000 and $450,000, the rebate will gradually reduce until it becomes 0% when the price reaches $450,000.<\/span><\/p>\n

On the other hand, the provincial part of the HST rebate allows the homebuyer to claim up to 75% of the tax. The minimum provincial tax you can claim is $24,000. Unlike the federal portion that ends when the price is $450,000, you can still claim the provincial portion.<\/span><\/p>\n

When a buyer purchases a new property, the HST rebate will be assigned to the builder upon closing. The builder then uses the rebate to reduce the purchase cost of the property. This portion of the HST is not added to the property\u2019s purchase price, and the builder will apply for the HST rebate for the property.<\/span><\/p>\n

One thing to note is that the buyer needs to have the intention of acquiring the property as a primary place of residence when the offer to purchase is signed by the builder. This means the buyer should not lead the builder into believing that they are an investor when they\u2019re not.<\/span><\/p>\n

In the case where the buyer is purchasing the property to be used as an investment property (or if the intent is to use the property for purposes other than a primary residence), the buyer will need to pay the total amount that includes the purchase price and the HST amount. For this reason, the buyer\/investor will apply for the HST rebate.\u00a0<\/span><\/p>\n

Eligibility for the New Housing HST Rebate<\/b><\/h2>\n

You will be entitled to claim an HST new housing rebate in Ontario if you are an individual who:\u00a0<\/span><\/p>\n