Buying or renovating a new home is a major investment that strains the pocket book of most working class families. Fortunately, the CRA has a number of programs, including the Ontario HST New Home Rebate that can help you reduce your expenses. With this rebate, you may be able to recover a portion of the federal and provincial HST that you paid on your home. Read one to find out everything you need to know about the Ontario HST New Home Rebate!
Who Is Eligible for the GST/HST New Housing Rebate?
If you purchased a new home, constructed a new home, or substantially renovated your house, either for yourself or a family member, you paid GST/HST on the purchase price, and therefore you may be eligible to receive a rebate on a portion of the GST/HST you paid. You may also qualify if you purchased a share in a coop, a mobile home, or a floating home.
How Much Can You Recover in GST/HST?
The provincial component of the HST rebate is fixed at 6% to a maximum of $24,000, while the federal portion of the HST rebate is on a sliding scale, reducing to zero once the builder’s base price or “consideration” exceeds $450,000. Rebates are only available up to 2 years from completion of construction or renovation.
What does a substantial renovation entail?
If 90% of the interior of your home was removed or replaced, then you have done a “substantial” renovation. Or if you built a major addition that at least doubles the size of the living area of your home, that too constitutes a “substantial” renovation. Examples of these might be adding a second story to an existing house, but simply adding a family room or a bedroom, or enlarging a porch would not qualify.
In order to recover the federal portion of HST, a homeowner in Ontario of a newly built or substantially renovated home must fill out a Construction Summary worksheet (Form GTS191-WS) AND the GST/HST New Housing Rebate Application (Form GST191). To recover the provincial part of the HST, you must also fill out an Ontario Rebate Schedule (Form RC7191-ON).
If you purchased or substantially renovated a home that you purchased from a builder; purchased a share of the capital stock of a coop; or purchased a new or substantially renovated house from a builder where you leased the land from that builder, and the lease is for 20 years or more, or gives you the option to buy the land; then you can apply for a rebate by filling out certain forms.
To recover the federal part of the HST, you must fill out a Calculation Worksheet (Form RC7190-WS) AND a GST/HST New Housing Rebate Application for Houses Purchased from a Builder (Form GST190). If you live in Ontario, you can also recover the provincial part of the HST by filling out a GST190 Ontario Rebate Schedule (Form RC7190-ON)
Transitional New Housing Rebates
In certain circumstances, a transitional new housing rebate may be available in addition to any GST/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.
In Ontario, those living in a transitional home should fill out the Ontario Retail Sales Tax Transitional New Housing Rebate for Non-registrant First Resellers (Form RC7003-ON).
What To Include With Your Rebate Application
In most cases, no additional supporting documentation needs to be submitted along with your application. However you may be asked for proof of occupancy and for any invoices from vendors who did not charge you HST/GST. Be sure you keep all forms and original invoices for six years. The CRA will not accept estimates, quotes, photocopies, credit card statements, or account statements in lieu of original invoices.
As the HST on a new home is based on four value bands (<$368,200, $368,200 to $424,850, $424,850 to $484,500, and >$484,500), the CRA formula for calculating the rebate depends on the value of the home. As each value band requires a different formula relative to provincial and federal HST portions, it is advisable that you contact a lawyer at Kalfa Law calculate the value of your rebate and to ensure that you receive the full rebate value that you are eligible for.
-Shira Kalfa, BA, JD, Partner and Founder
© Kalfa Law 2019