"What exactly is the HST rebate for a new home?" "Who pays the HST for a new home?" "How is the HST rebate calculated?" These questions usually cause headaches, but because the HST rebate amount is relatively largeThis means that if not handled properly, your loss of money and time will also be very large.
This means that if not handled properly, the loss of money and time can be very large.
In order to make it easier for everyone to understand the ins and outs of the HST tax rebate for purchasing a new condominium or house in Ontario, the Golden Key Business Development Center hereby analyzes in detail the various situations related to the tax rebate program to remind new home buyers Issues that need attention in this regardIf your situation is different from ours, we recommend consulting your attorney and accountant for details about the HST rebate
1. Who will be the recipient of the HST rebate for new homes?
Everyone may know that HST rebates are available for those who purchase pre-construction condominiums, but they are not the only group of buyers who are entitled to HST rebates.In some cases, even homeowners who are completely renovating their homes can qualify for an HST rebate.
The following is a breakdown of who can receive the HST rebate in Ontario:
- End users and investors purchasing pre-sale apartments or houses
- Homebuyers purchase newly constructed homes that have never been lived in
- Homeowners who are completely renovating their home (no kitchen or basement renovations here)Instead, only head-to-toe transformations that affect every room in the house qualify)
- Build your own new house
2.HST rebate: new home owner-occupiers and rental investors
First of all, these two methods of claiming your HST rebate will differ depending on whether you plan to be owner-occupied or an investor who wants to rent out your home immediately after closing as a rental property
Owners of new houses
If you plan to move and live in a new property, you must apply for the New Home Rebate (NHR)Under the NHR, you will receive an HST rebate on the basis that you (or an immediate family member) will live in the new property as a new resident for at least the first year
In most cases, especially when purchasing an off-the-plan condo in the Greater Toronto Area (GTA), you will receive an immediate HST rebate in the form of a discounted price (the contract price is equal to the price of the new home plus HST/GST minus the HST/GST you can earn from tax refund received by the tax bureau)Most condo and house developers already factor HST rebates into contract pricesIf the new property is sold before the initial one-year window, the Canada Revenue Agency (CRA) will require you to refund the full HST rebate, which could total up to $30,000 CAD
So buyers who want to live in a new apartment must remember the following key points:
- The new home buyer (or immediate family member) must occupy the new home as their primary residence for at least the first 12 months after closing
- If the property is sold in the first year, the buyer will be required to return the full HST rebate
- Note: If the new home is rented in the first year, you may be required to pay HST in full, otherwise you can still get the rebate by applying for the New Residential Rental Property Rebate
- For the HST rebate to be viable, all co-signers must be living in the new home as new residents
- It is important to take all steps to make your new home your primary residence, including changing your driver's license address
- You can apply for HST tax refund up to two years after you obtain title.After two years have passed, you will no longer be eligible to claim the rebate
- Typically, the HST rebate is included in the pre-construction condo price list
New home rental investors
Whether you are a Canadian or foreign investor, you are eligible for the HST rebate on your new homeHowever, you must submit the New Residential Rental Property Rebate (NRRPR) form instead of applying for the NHR
To receive an HST rebate through the NRRPR, you must provide a one-year tenancy agreement showing that the new home was rented to a tenant for at least the first 12 months after handoverNew homes must be rented out for at least the first year before saleIf the investor transfers the property before one year, the investor is not eligible for the HST tax refund and must pay the full amount of the tax refund to the tax bureau.
Unlike the NHR, investors applying for the rebate on new residential rental properties must pay the full HST upfront and receive the rebate around two or three months after submitting proof of rental agreement
- The investor must provide a one-year rental contract and rent out the new home for at least the first 12 months
- If the new home is sold or used within the first 12 months, the HST refund must be fully refunded
- Under the NRRPR, investors are required to pay HST in full upon purchase and can only receive a tax refund two or three months after submitting a lease agreementTherefore, investors should be well prepared at the initial stage of purchase
- Investors planning to apply for a new rental home cannot apply for HST tax rebate through NHR, but must apply for NRRPR
- You can apply for an HST rebate up to two years after the handover of your new home.After two years have passed, you will no longer be eligible to claim the rebate
- Typically, HST rebates are included in the pre-construction condo price list
3. How much is the HST tax rebate?
The Ontario Harmonized Sales Tax totals 13% of the new home purchase price, totaling 5% GST and 8% PST
HST rebate amount depends on the price of the new homeIf the price of your new home or apartment is less than $350,000, you are eligible for a rebate of up to $30,000 (36% on the GST component and 75% on the PST component)Between CAD$350,000 and CAD$450,000 is an adjustable scaleRebates of up to $24,000 available for properties priced over $450,000