If you’re looking to buy a home, the current real estate environment can be very daunting.Between the pandemic, rising inflation, and the housing crisis, becoming a homeowner seemsmore unattainable than ever. In this article, you will find an overview of…
If you’re purchasing a newly built home from a builder, custom-building your own home, or substantially renovating an existing home, you may qualify for a rebate of the provincial GST/QST or federal part of the HST that you paid on the home.
- You may be eligible for this rebate if you’re purchasing a newly built home from a builder, custom-building your own home or substantially renovating an existing home
- The rebate isn’t automatic – you must apply manually when you file your taxes within two years of you closing date
- Working with a tax professional when making a large purchase such as a home will help ensure you don’t miss out on any potential rebates
Who’s eligible for the GST/QST/HST New Housing Rebate?
Your eligibility for the various rebates available depends on whether a builder is constructing your new home, you’re having your home custom built or you’re substantially renovating an existing home, as well as the area of the country in which you live.
Tip: If you live in British Columbia, Nova Scotia or Ontario, provincial new housing rebates may be available for the provincial part of the HST, regardless of whether the GST/HST new housing rebate for the federal part of the HST is available.
For a house purchased from a builder, you may be entitled to claim a GST/QST/HST New Housing Rebate if you purchased one of the following:
- New or substantially renovated house (building and land) from a builder
- New or substantially renovated mobile home or a new floating home from a builder (this includes the manufacturer or vendor)
- Share of the capital stock of a co-operative housing corporation (co-op)
- New or substantially renovated house from a builder where you leased the land from that builder under the same agreement to buy the house and the lease is for 20 years or more or gives you the option to buy the land
For an owner-built house, you may be entitled to claim a GST/QST/HST New Housing Rebate if you:
- Built, or engaged someone else to build, a house on land that you already owned or leased
- Substantially renovated, or engaged someone else to substantially renovate, your existing house (at least 90% of the interior of the existing house must be removed or replaced to be a substantial renovation)
- Renovated, or engaged someone else to renovate, your existing house and built, or engaged someone else to build, a major addition to your house that at least doubles the size of the living area of the house (for example, the addition of a full second story to an existing bungalow. Adding a sun porch, sun room, family room or bedroom by itself is not a major addition)
- Converted a non-residential property into your house
- Purchased a new or substantially renovated mobile home or a new floating home from a builder of the home (this includes the manufacturer or vendor of the home) or you or someone you hired substantially renovated such a home. For a mobile or floating home, you have the option of claiming either the owner-built new housing rebate or the new housing rebate for a house purchased from a builder
For a renovated house, you may be entitled to claim the GST/HST new housing rebate if you did one of the following:
- Substantially renovated your existing house
- Converted a non-residential property into a house
- Built a major addition onto your existing house if, along with that addition, you also renovated the house
Tip: In certain circumstances, a transitional new housing rebate may be available in addition to any GST/QST/HST new housing rebate and provincial new housing rebate for which you may be eligible, even if the house is not your primary place of residence.
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Calculating the GST/QST/HST New Housing Rebate
Calculations are similar for both the GST, QST and HST rebates, but rebate details vary by province.
The new housing rebate application in Ontario, for instance, must be filed within two years of the new home closing date. The maximum Ontario new housing rebate amount for owner-built houses depends on whether you paid the HST on your purchase of the land. The Ontario new housing rebate is limited to a maximum of $24,000 if you paid the HST on the purchase of the land, and $16,080 if you didn’t.
Let’s say, for instance, you purchased a home valued at $400,000 in Ontario. In some cases, the builder of your home will have already included the HST in the purchase price. In that case, you’ll be able to automatically include the purchase price plus HST amount in your mortgage. But, in all other instances, you’ll pay whatever HST rate is applicable in your province or territory (13% in Ontario) on top of the $400,000 pre-tax price: $400,000 x 13% = $52,000 ($20,000 GST portion of HST and $32,000 provincial portion of HST).
Next, let’s calculate the value of the rebate that can be claimed. In this case, it’s 36% x $20,000 ($7,200) for the GST portion of the HST and 75% x $32,000 ($24,000) for the provincial portion of the HST, which equals up to $31,200.
In Quebec, an additional rebate is available of 4.9875% of the purchase price (50% of the 9.975% QST). The full rebate is, however, only available up to a purchase price of $200,000, making the maximum rev=bate $9,975. A partial rebate may also be available to a maximum purchase price of $300,000.
Required Forms: GST190 & GST191
It’s important to note that there are two separate tax forms available to make the GST claim depending on whether you purchased the home from a builder or you built your own home.
Form GST190 is the correct form to fill out if you purchased your home from a builder, while you’ll have to complete Form GST191 if you built your own home.
You need to complete the appropriate form with your taxes in order to file your rebate, and this must be done within two years of your home’s closing date.
Required form in Quebec: FP-2190.AC-V
If you live in Quebec, to claim the GST-QST New Housing Rebate, you must complete the FP-2190.AC-V application (new home purchased from a builder).
Working with a tax professional when making a large purchase such as a home will help ensure you don’t miss out on any potential rebates. There are several different programs available, particularly for first-time home buyers. See: First-Time Home Buyer Grants in Canada
Other articles in this guide: “Closing Costs: What are They And How Much Will You Pay?”
- What Does a Real Estate Attorney Do?
- What is a Mortgage Interest Adjustment?
- Statement of Adjustments & Trust Ledger Statement
- Provincial Sales Tax (PST) on Mortgage Default Insurance
- Closing Costs Buyer’s Fees
- Property Taxes
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