The purchase of a newly constructed home or rental property or the substantial renovation to your current home or rental property can entitle you to a GST/HST rebate up to a maximum of $30,300.
GST/HST New Housing Rebate
The GST/HST New Housing Rebate is available on the purchase of newly constructed housing units (including a detached home, a semi-detached home, a duplex, a townhouse, a residential condominium unit, a unit in a co-operative housing corporation, or a mobile home). New homes are considered to be those which are purchased from a builder, are owner-built or are homes that have undergone a substantial renovation, major addition or conversion. To qualify:
• A substantial renovation is considered to be 90% or more of the interior of an existing house at a minimum has to be removed or replaced.
• A major addition should at least double the size of the liveable area of your existing house, and include a renovation of the existing house.
• A conversion is where you convert a property from non-residential use into your house, even if the extent of work undertaken does not meet the requirements of a substantial renovation. For all 3 essentially the work must be so great that the existing house ceases to exist and the result is a newly built house.
There are two different New Housing Rebates available. The amount received under both rebate programs are based on the purchase price of the housing unit if purchased from a builder and the fair market value of the completed structure including the land (at the time of occupancy) if owner-built or substantially renovated.
The first is the federal GST New Housing Rebate, which is a rebate of 36% of the federal GST paid to a maximum of $6,300. This rebate however can get clawed back. Housing units purchased for $350,000 receive the maximum rebate of $6,300. Housing units purchased for less than this get 36% of the GST paid on the purchase price. Housing units purchased for greater than $350,000 but less than $450,000 are reduced on a pro-rata basis. Housing units purchased for greater than $450,000 are not eligible for the GST New Housing Rebate.
The other is the provincial HST New Housing Rebate. This rebate is available to homes purchased in B.C., Nova Scotia and Ontario. For our purposes we will deal with the Ontario HST New Housing Rebate. For new home purchases the HST New Housing Rebate is 6% of the purchase price to a maximum of $24,000. For owner-built and substantially renovated homes the rebate is based on the HST paid, calculated as 75% of the provincial portion of the HST paid on purchases to construct or renovate the home to a maximum of $24,000, if HST was paid on the purchase of the land, or $16,080, if no HST paid on the purchase of the land. There is no clawback on the HST New Housing Rebate, it is just capped at the maximum of $24,000 or $16,080 depending on your situation.
In order to claim both the GST and HST New Housing Rebate or just the HST New Housing Rebate you need to file both the provincial and the federal rebate forms. These forms must be filed within 2 years from the date ownership was transferred to you for purchased homes or for owner built/substantially renovated homes within 2 years after the earlier of:
• The day the unit is first occupied after the construction/substantial renovation has begun;
• The day ownership is transferred under an exempt sale without the unit ever being occupied;
• The day construction/substantial renovation is substantially complete.
GST/HST New Residential Rental Property Rebate
The GST/HST New Residential Rental Property Rebate (NRRP) mirrors that of the GST/HST New Housing Rebate except that is available only on newly constructed, substantially renovated or converted residential rental units used for long-term rental accommodations. A qualifying unit is a self-contained residence, that the expected first use of the unit will be the rental of the unit as a primary place of residence, for a period of continuous occupancy of at least 12 months, under one or more leases.
The amounts and criteria related to the GST/HST NRRP Rebate are exactly the same as the GST/HST New Housing Rebate.
However, if the rental unit is sold within one year from the time it is first occupied to a purchaser who is not acquiring it for use as a primary residence for themselves or someone related to the purchaser, then the NRRP Rebate is subject to recapture plus interest.
In order to claim both the GST and HST NRRP Rebates or just the HST NRRP Rebate you need to file both the provincial and federal rebate forms. These forms must be filed within 2 years from the end of the month in which tax first becomes payable on your purchase or in which the self-supply occurred.
If you feel that you may be entitled to either the GST/HST New Housing Rebate or the GST/HST NRRP Rebate, please feel free to contact us so that we may assist you with calculating the amount of your rebate and completing the rebate forms.