Ask SRJ: Do I Qualify for the GST/HST Housing Rebate?
It is credible to state that a large portion of Ontario-residents are unaware of the several benefits one could reap by applying for the GST/HST New Housing Rebate. First off, it must be understood that home buyers must pay a portion of GST and HST taxes on the homes that they purchase. However, the GST/HST New Housing Rebate essentially allows the home buyers to re-collect a portion of the amount paid.
On July 1st, 2010, Ontario had implemented its decision to combine the Retail Services Tax with the Goods and Services Tax (GST), which had given way for the initiation of the new, Harmonized Sales Tax (HST). Accountants of Toronto suggest that the HST typically applies to the selling prices of homes that were newly constructed, homes with interiors renovated at a portion of 90% or more, as well as relocated houses.
However, although such a decision had simplified the process to an extent, it does not come without a shortcoming. The transition has resulted in new home buyers facing an increase in sales tax, from having to pay 5% before, to 13% now.
It must be noted, however, that there is still hope for new home buyers. The government has introduced a GST/HST New Housing Rebate for home buyers who have intended the purchased home as their, or their spouse’s/common-law’s primary place of residence.
There are now two new housing rebates for new home buyers within Ontario, which are known as the Federal, and the Provincial rebates. Toronto Accountants state that these rebates allow individuals to recover a percentage of additional taxes paid on new or substantially renovated homes, on the condition that the rest of the requirements are met.
Federal GST/HST New Housing Rebate.
In order for a home buyer to be eligible for the Federal Rebate option of the GST/HST New Housing Rebate, the total purchase price must be less than $450,000. It is critical that the purchase price be less than the said amount, as otherwise, the home buyer will not be qualified to recover any portion of the Federal Rebate option. Toronto Accountants state that typically, the Federal Rebate amount is approximately 1.8% of the purchase price, if the price is less than or equal to $350,000. However, if the purchase price is higher than this amount, the Federal Rebate portion decreases slowly, up to the maximum qualified amount of $450,000.
Provincial GST/HST New Housing Rebate.
In Ontario, the maximum amount that an individual could receive as the Provincial Rebate option of the GST/HST New Housing Rebate, is the amount of $24,000, which is approximately 6% of $400,000. Accountants of Toronto state that home buyers essentially pay 2% on the first $400,000 of the purchasing price, and then pay 8% thereafter. Although the Provincial Rebate amount has been capped at the first $400,000 of the purchasing price, unlike the Federal Rebate option of the GST/HST New Housing Rebate, a new home buyer could apply for the Provincial Rebate option at purchase prices greater than $450,000.
Criteria and Conditions.
It is critical to note that the primary factor, which is considered by the Canada Revenue Agency for the purposes of the qualification for the GST/HST New Housing Rebate, is the intent at the time of purchase. If the purchase was intended as a primary place of residence, the purchaser will qualify for the rebate. On the other hand, Toronto Accountants state, that if the purchase was made as an investment for the purpose of rental property, the purchaser would typically not qualify for a rebate. However, as a builder, one may still qualify to recover a portion of the taxes paid.
In order for a new-home buyer to qualify for the GST/HST New Housing Rebate, the Accountants of Toronto state that all of the following conditions must be met:
- The home buyer has purchased a new or a substantially renovated house/condo from a builder, and has paid all of the GST/HST taxes due.
- The builder sells the purchaser the house, as well as the related land upon which the house is located under the same written agreement.
- Upon signing the purchase agreement, the purchase is made with the intention of making it the buyer’s or the buyer’s spouse’s/common-law’s primary place of residence.
- The purchase price of the home, the land, plus the purchase price of the taxable assignment of the original sale agreement before tax totals to less than $450,000, in order to qualify for the Federal Rebate option.
- In the case of the purchase of a renovated home, the ownership of the house is transferred to the purchaser after substantial renovation has been completed.
- The house must have been unoccupied beforehand, or in the case of a renovated house, the house must have been unoccupied once a substantial amount of renovation had been completed.
- One of the following must apply to the purchaser:
- The purchaser, or a relation of the purchaser is the first occupant of the house
- Made an exempt sale of the house before its occupation by anyone
With abundant experience in providing real estate and investment advice, we assist our clients with all forms of rebates, including the GST/HST New Housing Rebate. SRJ Chartered Accountants have offices in Mississauga and Toronto, and we look forward to you contacting us with further questions directly by email (firstname.lastname@example.org) or by calling our office (647-725-2537).