HST | Locate Condo | Top Toronto Condos

HST New Housing Rebate in Ontario

The Ontario HST rebate for new homes is available to anyone in the province who purchases a new home or condo from a builder, or who hires a builder to construct a new house. When purchasing a new home or condo to live in, or for a family member to live in, the Ontario HST rebate is frequently assigned to the vendor upon closing who consequently lowers the purchase price by the rebate amount. This allows the home builder or condo developer to effectively advertise a lower “sticker price”, increasing sales, and enables a buyer to qualify more easily for a mortgage large enough to afford the property.

Ontario New Residential Rental Property Rebate (NRRPR)

When purchasing a new condo or home to rent out, the Ontario NRRP Rebate can only be applied for by the buyer after closing and never by the vendor. This creates an additional financial burden on anyone buying a brand new rental property as they are forced to pay the full purchase amount including HST upfront and eat the interest costs until he or she is granted the rebate. For this reason, anyone who buys a new home or condo as an investment property should promptly apply for the rebate.

NRRP Rebate and HST Rebate Application Service

If you recently bought a new house or condo and did not transfer rights to your new home rebate to the builder in exchange for a lower purchase price, Rebate Specialists can help you obtain a rebate of up to $30,000 today! Some Rebate Specialists do not charge a single dollar until after a non-taxable new home HST rebate cheque in your name is issued by the Government. Applying for the rebate on your own can be difficult and confusing.

Why Does Ontario Rebate HST on New Homes?

Harmonized Sales Tax was implemented in Ontario on July 1, 2010, which raised the tax on new homes in the province from 5% (GST) to 13% (HST). In an effort to help homeowners deal with the increased cost of buying a new home, the Government introduced a rebate program to reimburse buyers for a portion of the additional new home tax.

Ontario HST Rebate New Home Eligibility

You may be eligible for an HST rebate of up to $30,000 if you have done any of the following in Ontario:

Purchased a newly constructed home
Purchased a new condo
Built a house
Contracted someone to build a house
Substantially renovated a house or condominium
Contracted someone to extensively renovate a home or condo
Added a major addition to a home
Rebuilt a home that was destroyed by fire
Bought shares in a newly constructed cooperative housing project
Converted a non-residential property into a home

What is the Maximum New Housing HST Rebate Possible?

As of summer 2010, new home buyers in Ontario are charged 13% HST on their purchase, which consists of a 5% federal tax and 8% provincial tax. The new house HST rebate in Ontario essentially kicks back 75% of the Ontario portion of the HST, up to a new home purchase amount of $400,000. This results in a maximum rebate at a provincial level of $24,000 ($400,000 x 0.08 x 0.75). It is also possible to obtain a federal rebate of up to $6,000. In other provinces, the new home rebate is clawed-back for any house purchase over $450,000. This is not the case in Ontario, however, where the provincial rebate is never clawed back it simply only applies to the first $400,000 meaning the largest rebate possible even for a million dollar home is $24k provincially. The maximum rebate possible federally is an additional $6,000.

How Long Does It Take To Receive The HST Rebate?

NRRP rebates and new housing HST rebates are typically received from the Canada Revenue Agency (CRA) within two months. Rebates can be as fast as four weeks, but can occasionally take up to six months to process. Rebate Specialists have a list of documents and information required from the homeowner in order to prepare the rebate application on their behalf. Rebate Specialists review all expenses and supporting documentation to ensure eligibility before they submit a claim to the CRA.

HST Rebate New Home Deadline

The Ontario new home HST rebate or NRRP Rebate must be filed within two years of a new home or condo closing. If you are applying for an HST renovation rebate, you have up to 2 years to apply following the completion of construction.

Primary Residence Requirement

To be eligible for the HST home rebate, a new house or condo unit must be used as the primary place of residence by the purchaser or their immediate family (meaning people related by blood, marriage, common-law partnership, or adoption). There are a number of factors considered by the CRA when determining whether or not a house is a person’s primary residence. These factors include how long the individual has lived in the unit, whether the person considers the house as their main residence, and if they have used that address on any personal or public records such as a driver’s license. Home and condo builders in southern Ontario typically credit the total amount of a buyer’s HST home rebate towards the purchase price of the house. In rare circumstances, the builder will pay the rebate directly to the purchaser. This can provide the buyer with enough money to furnish their new property without requiring a cash back mortgage.

HST Rebates on New Homes with More Than One Buyer

A recent story in the Toronto Star highlighted a large number of people in Ontario that are receiving demands from the Canada Revenue Agency to repay the HST new-home rebate they received upon closing on their real estate purchase. The claim typically arises when a third party has been added to a home or condo’s title at the insistence of the mortgage lender. According to the CRA, the Excise Tax Act says that if even a single registered buyer does not qualify for the new home HST rebate, then all the buyers are disentitled. One news story on thestar.com quotes a real estate lawyer from Vaughan explaining that several of his clients have been dinged for more than $26,000 each (the maximum rebate amount plus interest) because an uncle or aunt was registered as a 1% owner to help the buyer(s) qualify for a mortgage. The problem is, an uncle or aunt is not considered a “close relative” according to the CRA, which means that if their primary address is not also the unit in question, then no one officially qualifies for an HST rebate.

If you purchase newly constructed real estate in Ontario and want to qualify for the HST rebate new home program, you must use the property as the primary place of residence for yourself or someone closely related to you such as a child, grandchild, brother, sister, or someone you are related to by marriage or common-law partnership. Friends, business associates, and even uncles, aunts, nephews, nieces, and cousins are all excluded from eligibility. If anyone that fits into this excludable category owns even a small percentage of your new home or condo, you are not eligible for the HST new home rebate. It is not possible to receive an allocated percentage of the rebate based on how much of the real estate you own; either everyone qualifies for the rebate or no one does. If you did receive an Ontario HST new housing rebate even though one or more of the individuals listed on the title will not be living at the residence and are not closely related, it is advised that you contact the CRA immediately. When the CRA eventually flags the transaction (which they likely will), you will be charged interest on the total amount of the refund which can add up quickly. For this reason, it is best to solve the issue immediately rather than accrue thousands of extra dollars worth of interest.

People allowed to receive the new home rebate even if the property is not their primary residence:

Spouses
Parents
Grandparents
Siblings

People disqualified from receiving the HST rebate if the home or condo is not their primary residence:

Aunts
Uncles
Cousins
Nephews
Nieces
Friends
Business Associates

The CRA allows “voluntary disclosure,” which means if you made a mistake and requested an HST rebate for a new home and were not actually eligible, you can correct the problem before it becomes a more serious issue. It is possible to buy a new condo in downtown Toronto with the idea of living it, but then something in your life changes and you end up selling it very soon after taking possession. When you closed on the unit, you considered it to be your primary residence, so you claimed the full HST new condo rebate that you were entitled to, but the fact that you sold it soon after makes the purchase look like a buy and flip in the eyes of the CRA.

According to several Canadian newspapers, the C.R.A. has been actively challenging HST new home rebate claims made on purchases of new homes and new condos and disallowing the rebate if the applicant did not follow all the rules. If anyone is listed on the title (even just for mortgage qualification reasons) that does not live on the premises and is not “closely related”, no rebate will be issued. Likewise, if you do not properly apply for the HST rebate on rental property (NRRPR), you could retroactively receive a Notice of Assessment or Notice of Reassessment from the CRA that states your HST rebate claim has been denied and that you owe money for not qualifying for the rebate. The new residential rental property rebate requirements state that a tenant must have signed a lease for the investment property owner to qualify. The CRA also charges interest on all outstanding amounts, and has been very successful when challenged in tax court, so always make sure you understand all the rules and regulations before applying for a new property rebate.

Is The Home Builder or Condo Developer Charging Me HST?

In an effort to lower the “sticker price” of a newly constructed condo or house, the builder or developer will often incorporate the rebate into the listed price of a new home or condo. In this scenario, the rights to the proceeds of the new housing rebate are transferred to the developer upon signing the purchase agreement, and in exchange, they deduct the HST rebate amount from the purchase price. Essentially, the vendor is lending the buyer money knowing they will be paid back when they buyer’s HST new housing refund is issued. This scenario is very commonplace since it lowers the purchase price for the buyer, and relieves them from the headache of having to file for the refund themselves.

There are two components to the new housing HST rebate in most provinces, the federal portion, and the provincial portion. In Ontario, however, the rebate only applies to the provincial portion of the HST, which is 8%. Having a condo developer or home builder apply the maximum HST rebate for new homes to your purchase allows you to borrow the least amount of money possible to afford the property. Rather than taking out a larger mortgage to cover the house, townhome, co-op, or condo’s full cost including HST, your mortgage only has to cover this amount minus the amount of your H.S.T. rebate. If the price of the new house or condo includes a deduction of the HST rebate amount, however, you will not be eligible to apply for the rebate on your own since the rights to it belong to the vendor.

Ontario Now Requires Citizenship and Residency Information

As of April 2017, homebuyers in Ontario must provide information to the Government about their citizenship and official place of residence. This is part of the Government’s strategy to tackle the Toronto housing affordability crisis. According to policy-makers, the information is being requested “to support evidence-based policy development.” The Prescribed Information for Purposes of Section 5.0.1 Form is incorporated with the land-transfer tax documents, and requires the following info:

Type of dwelling (condo, semi-detached, detached, cottage, etc.)
Intended use of property (investment, principal residence, etc.)
Residency and citizenship status of purchaser
Identity of company owner (if purchased by a corporation)
Identity of beneficial owners (if property is purchased on behalf of a third party)

Source : www.hstrebatenewhomes.ca