If you’re buying a newly built home, you’ll need to pay HST or GST on top of the purchase price. You pay it for the same reason that you pay sales tax on almost everything else you buy. Whether you’ll pay GST or HST depends on your province, as will your final tax rate. But no matter where you live, you can qualify for one of two housing rebates. While the rebate is often used by first-time home buyers, it’s available to everyone. First, the new housing rebate equals 36% of the GST that all buyers need to pay when buying a new home in Canada. This rebate is up to $6,300 and valid on homes with a fair market value of $350,000 or less. If you’re buying a home priced above this amount but still less than $450,000, don’t fret. There’s still a partial rebate that can be claimed. There may also be additional provincial rebates available for the remainder of the HST.

Who’s eligible for the GST/HST rebate?

As long as you, and anyone else you’re buying with, are an individual home buyer and not a corporation or business partnership, you’re eligible for this rebate if:

  • Your home is listed as your primary place of residence, and
  • You’ve purchased a new or substantially renovated a single, semi, condo, townhouse, mobile, or modular home from a builder, or you purchased a share of interest in a co-operative home.

And yes, first-time home buyers are also eligible for the GST/HST new housing rebate, on top of other programs available to them.

Calculating the GST/HST New Housing Rebate

For both the GST and HST rebates, the calculations are similar. Let’s take a look at how you would calculate the taxes and rebates on a home purchased in Ontario.

First, we’ll say the home you purchased was valued at $320,000. In some cases, the builder of your home will have already included the HST in the purchase price. The only difference here is that you’ll be able to automatically include the purchase price plus HST amount in your mortgage. However, in all other cases, you’ll pay whatever HST rate is applicable in your province or territory (13% in Ontario) on top of the $320,000 pre-tax price:

$320,000 x 13% = $41,600 ($16,000 GST portion of HST and $25,600 provincial portion of HST)

Next, we’ll calculate the value of the rebate that can be claimed. In this case, it’s 36% x $16,000 ($5,760) for the GST portion of the HST and 75% x $25,600 ($19,200) for the provincial portion of the HST. That adds up to $24,960.

It’s important to note that for new homes in Ontario, the maximum rebate amount for the provincial portion of the HST is capped at $24,000. It’s the maximum amount available on any new home valued at $400,000 or more.

The GST/HST new housing rebate is a simple rebate to claim. However, unlike some other rebates and incentives, it’s not automatic. Instead, it requires you to apply manually.

NOTE: Speak to your Lawyer prior to your purchase for advice on how to claim this rebate.