The GST/HST new housing rebate is a program from the Canadian government that offers a rebate on the Goods and Services Tax (GST) or the Harmonized Sales Tax (HST) for new homes. Canadian homebuyers who purchase a new-build home, preconstruction, or renovate their existing homes can apply for this rebate.
Getting a GST/HST new housing rebate is definitely something you should consider if you are getting a new home in Canada because, in addition to your construction, property taxes, and land taxes, you will also pay your GST/HST.
The GST/HST is the taxes made on top of the purchase price when you buy a newly built house, which could add thousands of dollars to the cost price of the house. It is not the same as land, property, and construction taxes.
Fortunately, applying for the GST/HST new housing rebate can save you thousands of dollars in taxes. If you want to know more about the GST/HST new housing rebate and how to get yours, stick with us.
What is The GST/HST New Housing Rebate, and How Does It Work?
The GST/HST new housing rebate allows a home buyer to take back some of the federal sales taxes paid when buying a new or heavily renovated house for use as the primary residence when all of the other conditions are met.
The GST/HST sales taxes are paid on top of the purchase price when you buy a new house, and your province of residence determines how much you pay in sales taxes.
Thankfully, you can reclaim all or a portion of the federal and provincial sales taxes through the GST/HST new housing rebate program.
This program is not only for Canadian first-time home buyers; everyone can take advantage of it. You can qualify for the GST/HST new housing rebate if you are building your own home or buying from a builder.
The GST/HST new housing rebate is equal to 36% of the GST that is required to be paid by a home buyer in Canadian provinces. It gets as high as $6,300, but it counts on homes with fair market value (FMV) of $350,000 and below.
If the price of the home you buy is above $350,000, you can still claim a partial rebate from the government, but the amount has to be lower than $450,000.
For the provinces where HST is paid (Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, and New Brunswick), the rebate is 36% of the GST part of the tax.
It is also worth noting that there could also be extra rebates (specific to different provinces) available for what is left of HST in particular.
Do I Qualify for the GST/HST New Housing Rebate If I am Building my Home By Myself?
You may qualify for the GST/HST new housing rebate if you build your home yourself. However, to qualify, you must have built your new house on a piece of land previously owned/leased by you or have to prove that over 90% of the interior in the house that existed before was either replaced or removed.
You can also qualify if you owned a non-residential building but rebuilt it into a residential house.
Also, keep in mind that for expenses from substantial additions to the home to qualify for the rebates, the living space must have been enlarged by the additions (by a factor or more).
Who is Eligible for the GST/HST New Housing Rebate
You are eligible for this particular rebate if:
- If you are not buying it as part of a business partnership or corporation
- The home is officially your primary place of residence
- You have bought a new/renovated home from a developer or a share of interest in a cooperative home.
How To Apply for the GST/HST New Housing Rebate
To apply for the GST/HST new housing rebate, you must submit two forms and your personal income taxes for the year. The first form is the GST/HST new housing rebate worksheet which should reflect your rebate calculation for the GST, while the second one is the application form.
If you purchased your home from a builder, submit the GST190 Application Form or the GST191 Application Form if your home is owner-built.
Remember that the deadline for applying is often two years after the base date indicated on the forms you submitted.
In the case of provinces that allow provincial tax rebates (BC, Nova Scotia, Saskatchewan, and Ontario), an additional form will be submitted and mailed to the tax centers indicated on their websites.
There is a possibility that you will be asked to provide invoices or occupancy proof. Your payment will be received in about six months from the application.
GST/HST New Housing Rebates in Canada’s Provinces
Below is some useful information about the GST/HST new housing rebate available in the different provinces of Canada:
1. Ontario New Housing Rebate
In Ontario, HST is charged at 13% with an inclusive GST of 5% (with Provincial Sales Tax (PST) of 8%). The rebate you may get for GST is 36% of the GST amount of tax (up to a max of $6,300). You can claim a rebate amount of 75% for the PST amount of tax (up to a max of $24,000 if you paid HST on the property’s land and $16,080 if you did not).
2. Nova Scotia New Housing Rebate
Nova Scotia charges HST at 15% (GST at 5% and PST at 10%). While you can claim a rebate amount of 36% on the GST tax (up to a max of $6,300), you can only claim 18.75% on the PST (up to a max of $3,000).
3. Saskatchewan New Housing Rebate
In Saskatchewan, the PST is 6%, and the GST is 5% respectively. The rebate amount you may get for the GST is 36% of the GST amount of tax (up to a max of $6,300), and if the price of the purchase of the property is lower than $350,000, you can claim a rebate amount of 42% of the PST tax.
However, the rebate rate is continuously reduced until the purchase price gets to $450,000 (this is when the rebate for PST becomes ineligible).
Final Thoughts on the GST/HST New Housing Rebate
Getting a GST/HST new housing rebate is simple if you are well-informed. But remember that GST/HST new housing rebates are not automatic like other incentives and rebates in Canada. You have to apply for the rebate manually, so keep this in mind at tax time.
We recommend that you procure the services of a tax accountant to help you sort out your taxes (if you have made some large transactions within the tax year). Because buying a new home falls in that category, an expert’s listening ears and advice can go a long way.
FAQs on the GST/HST New Housing Rebate
What Is Fair Market Value?
Fair market value is a selling price for an item to which a buyer and seller can agree. In real estate, the ceiling price may be gotten in a transaction between unconnected parties.
It is also used to calculate the New Residential Rental Property Rebate (a rebate for landlords and owners of brand-new residential rental property).
What Is the Difference Between GST and HST?
Goods and Services Tax (or GST) is a value-added tax (VAT) imposed by the government of Canada. It directly affects most goods/services in the country.
This 5% VAT applies to every province in Canada (even though some provinces use it as their tax). Provinces that adopt GST as their only tax are Northwest Territories, Nunavut, Yukon, and Alberta.
On the other hand, Harmonized Sales Tax (HST) is GST and Provincial sales tax (PST) combined (and it is only used in certain provinces). Ultimately, the objective of this tax is to make collecting sales tax easier, which is achieved by collecting one tax alone.
HST is used in the following provinces: Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, and New Brunswick. The charge in these provinces for HST is 15% (Ontario is an exception, with 13% being charged).
