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    HST New Housing Rebate – What New Home Buyers Should Know

    In Ontario, the sale of newly built homes is subject to GST/HST. This means that anyone in Ontario who purchases a new home from a builder is required to pay HST/GST on their purchase.

    The GST/HST New Housing Rebate (the “Rebate”) was introduced to help homeowners deal with the cost of buying a new home. Provided a purchaser meets certain criteria, he/she may be entitled to offset up to $24,000 of the provincial taxes, and up to $6000 of the federal taxes paid on closing.

    To avoid last-minute surprises, both new home builders and new home purchasers in Ontario should be cognizant of the eligibility requirements for the Rebate prior to entering into an agreement of purchase and sale for a newly built home. 

    Who is eligible for the Rebate?

    Purchasers should keep the following in mind when determining their eligibility for the Rebate:

    • The Rebate only applies to newly constructed or substantially renovated houses. The term “substantially renovated” typically entails a building where 90% or more of the interior area has been renovated.
    • The property must be a qualifying “house”. This can include a detached or semi-detached single-unit house, a duplex, a condominium unit, a townhouse, a co-op housing unit, a mobile home, and a floating home.
    • The purchaser must be buying the home as his/her primary place of residence or that of their immediate family. Various factors will be considered by the CRA when determining if a house consists of a person’s primary place of residence. At the very least, a purchaser should live in the house during the majority of the year and there should be clear signs that the purchaser has made the house his/her primary place of abode (i.e. the residence’s address is used for mailing purposes on government-issued records, utility bills, tax returns, driver’s licence, etc.).

    For a further listing of requirements to qualify for the new housing rebate in Ontario, click here.

    How do you apply for the Rebate?

    In most cases, the purchase price charged by a builder on a newly built home already includes the HST/GST payable on the sale. This is premised on the purchaser qualifying for the Rebate and assigning it to the builder. Practically speaking, this means that when a qualifying purchaser meets with his real estate lawyer, he/she can expect to complete the prescribed rebate form and to swear a statutory declaration declaring that the home will be used as the purchaser’s primary place of residence. This documentation is then forwarded to the builder who subsequently completes the necessary filings to claim the Rebate.

    What happens if you don’t qualify for the Rebate?

    If a purchaser is not eligible for the Rebate, then HST/GST will be charged by the builder on top of the stated purchase price. For a purchaser, this means coming up with additional funds on closing.

    Rebate for Investors – New Residential Rental Property Rebate

    Where a purchaser does not qualify for the Rebate, other potential relief such as the New Residential Rental Property Rebate (the “Rental Rebate”) may be available to recover a portion of the HST/GST paid on closing.

    The Rental Rebate applies when a new home is purchased with the intent that it will be leased for a continuous period at least one year immediately after closing. Unlike the New Housing Rebate, the Rental Rebate cannot be assigned to the builder.

    To claim the Rental Rebate, an eligible purchaser will need to complete the prescribed rebate form and file it with the CRA along with a copy of their agreement of purchase and sale and lease. The Rental Rebate can be claimed up to two years after closing. 

    Ensure that you qualify for the new housing rebate

    When purchasing a new build in Ontario, always consult with your real estate lawyer to ensure that you qualify for the rebate. If you are a first time home buyer looking to claim the rebate and have questions regarding your eligibility, contact real estate lawyer Frank Bourgault at Merovitz Potechin LLP.

    The content on this website is for information purposes only and is not legal advice, which cannot be given without knowing the facts of a specific situation. You should never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. The use of the website does not establish a solicitor and client relationship. If you would like to discuss your specific legal needs with us, please contact our office at 613-563-7544 and one of our lawyers will be happy to assist you.

    Posted By: Frank Bourgault of Merovitz Potechin LLP

    Associate

    Frank’s practice focuses on commercial real estate and land development with an emphasis on real property acquisition/disposition, financing and condominium/subdivision development.

    Frank acts for a broad range of clients including developers, builders, lenders and investment companies. Prior to joining Merovitz Potechin LLP, Frank practiced at a prominent Bay Street firm in Toronto and gained experience with all types of condominium projects, including standard, common elements, vacant land and leasehold condominiums.

    Frank holds a Juris Doctor from the University of Ottawa. While at law school, Frank served as a caseworker for the school’s Business Law Clinic where he assisted entrepreneurs and small businesses in both official languages. He also worked in the Ministry of Finance’s Legal Services Branch and the Department of Justice’s Tax Law Section. Prior to law school, Frank obtained a Bachelor of Commerce (Finance) from the Telfer School of Management at the University of Ottawa.

    In his spare time, Frank is an avid fitness and sports enthusiast. He enjoys playing football, tennis, and rugby, and is a passionate supporter of the Green Bay Packers.

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