Could You Qualify For A New Home HST Rebate?

Woitzik Polsinelli LLP (“WP Law”) has specialized in real estate for over 22 years and was founded by lawyer Mark Woitzik in 2001. Despite facing a life-altering accident during his first year of university, Mark persevered and obtained an economics degree with Honors from York University after a year of physical rehabilitation. He later attended Osgoode Hall Law School, where he was called to the Bar in 2000. Over the course of his career, he developed his firm to be one of the top Real Estate firms in the Durham Region and eventually within the entire Greater Toronto Area. Though Mark no longer practices Real Estate Law, he has become well-known as a commentator on accessibility issues, providing expert insights on interest rates and real estate matters through appearances on CTV News.

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When purchasing a newly built home or condo in Canada, many buyers are often surprised by the additional cost of Harmonized Sales Tax (HST).

Canada Ontario Real Estate and Construction

Have you recently purchased a new home in Ontario? If so, you may be eligible for a New Home HST Rebate.

Understanding The Rebate

When purchasing a newly built home or condo in Canada, many buyers are often surprised by the additional cost of Harmonized Sales Tax (HST). What's less commonly known is that a significant portion of this tax can be recovered through federal and provincial rebate programs. The type of rebate you may qualify for depends on how you intend to use the property. Understanding the distinction is key to ensuring you claim the correct rebate.

The Difference Between Owner-Occupied & Rental Use New Home Rebates

There are two types of HST rebates for new homes:

New Housing Rebate for Owner-Occupied Homes ¹
New Residential Rental Property Rebate ²

While both rebates aim to offset the tax burden on new residential properties, the main difference lies in who will occupy the home.

New Housing Rebate: For Owner-Occupied Homes

This rebate applies if you or an immediate family member intend to live in the home as your primary residence.

WHO QUALIFIES?

You may qualify if:

You purchased a newly constructed home or condo.
You built a house on land you own or lease.
You substantially renovated your home (or hired someone else to do so).
You bought shares in a newly constructed cooperative housing project.
You converted a non-residential property into a home.

ELIGIBILITY

The purchase price of the home must be $450,000 or less to qualify for the federal rebate.
Investment properties and homes purchased solely for house flipping are not eligible.

New Residential Rental Property Rebate: For Rental Use

The New Residential Rental Property Rebate applies when you purchased a new home with the intention of renting it out long-term.

WHO QUALIFIES?

You may qualify if:

You purchased a newly built or substantially renovated home from a builder and paid GST/HST.
You built a new home or multi-unit addition yourself, or hired a contractor to do so, and reported it on your GST/HST return.
You substantially renovated a home (or had someone do it for you) and reported it on your GST/HST return.
You converted a commercial or non-residential building into a home and reported the change on your GST/HST return.
You leased or subleased land in a way that required you to report a self-supply of that land on your GST/HST return.

ELIGIBILITY

You must be the buyer, not the occupant.
The property must be new or substantially renovated.
The home must be rented to a tenant under a minimum one-year signed lease.
The fair market value of the qualifying residential unit must be less than $450,000 when the tax was payable on the purchase or self-supply of the property.

How Much are the Rebates Worth?

Federal GST Portion (5% of HST):

You can claim 36% of the 5% GST portion of HST, up to $6,300.
The rebate begins to phase out for homes priced over $350,000 and is eliminated at $450,000.

Ontario Provincial Portion (8% of HST)

You can claim 75% of the 8% Ontario portion of HST, up to a maximum of $24,000.
Unlike the federal rebate, the Ontario rebate is available for all home prices, even if your home costs over $450,000.

DEADLINES

Both the New Home Rebate and New Residential Rental Property Rebate must be claimed within two years of the:

Closing date (for purchases), or
Completion of construction (for renovations or self-built homes).

All required forms are available on the CRA website.

TAKEAWAY

Whether you're purchasing a new home to live in or as a rental investment, understanding the difference between the New Housing Rebate and the New Residential Rental Property Rebate is essential. Each rebate has its own eligibility rules, application process, and risks if claimed incorrectly. Taking the time to clarify your intended use of the property before closing—and gathering the right documents—can save you thousands of dollars and prevent future disputes with the CRA.

Footnotes

1. CRA. GST/HST New Housing Rebate. https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4028/gst-hst-new-housing-rebate.html

2. CRA. GST/HST New Residential Rental Property Rebate. https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4231/gst-hst-new-residential-rental-property-rebate.html

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.