Who Qualifies for the GST/HST New Housing Rebate?

You must buy a new home from a builder or substantially renovate an existing home. The home must be your primary place of residence. The purchase price must be below a certain threshold (usually $450,000 for the full rebate). You or a close family member must live in the home within one year of purchase.

Exploring GST HST Rebate Options for Home Buyers in Canada

shamimara2009
Apr 27
3 min read

Buying a home in Canada involves many costs, and taxes like GST (Goods and Services Tax) or HST (Harmonized Sales Tax) can add a significant amount to the price. Fortunately, the Canadian government offers rebate programs to help home buyers recover some of these taxes. Understanding these rebate options can save you thousands of dollars and make your home purchase more affordable. This post breaks down the key GST/HST rebate options available for home buyers in Canada, how they work, and what you need to qualify.

Eye-level view of a newly built Canadian home exterior with a "For Sale" sign — Newly built Canadian home with 'For Sale' sign

What Are GST and HST?

GST is a federal tax of 5% applied to most goods and services in Canada. HST combines the federal GST with a provincial sales tax and applies in provinces like Ontario, Nova Scotia, New Brunswick, Prince Edward Island, and Newfoundland and Labrador. The HST rate varies by province, ranging from 13% to 15%.

When you buy a newly constructed home or substantially renovate an existing one, GST or HST applies to the purchase price. This tax can add thousands of dollars to your total cost, but rebates are available to reduce this burden.

The GST/HST New Housing Rebate

The most common rebate for home buyers is the GST/HST New Housing Rebate. It allows eligible buyers to recover part of the GST or the federal portion of the HST paid on a new or substantially renovated home.

Who Qualifies?

You must buy a new home from a builder or substantially renovate an existing home.
The home must be your primary place of residence.
The purchase price must be below a certain threshold (usually $450,000 for the full rebate).
You or a close family member must live in the home within one year of purchase.

How Much Can You Get Back?

For homes priced up to $350,000, you can get back 36% of the GST paid, up to a maximum rebate of $6,300.
For homes priced between $350,000 and $450,000, the rebate is gradually reduced.
For homes over $450,000, no rebate is available on the full price, but a partial rebate may apply to the first $450,000.

In provinces with HST, the rebate applies only to the federal portion (5%) of the HST, not the provincial portion.

Example

If you buy a new home in Ontario for $400,000, the HST is 13%, or $52,000. The federal portion is 5%, or $20,000. You could get back 36% of $20,000, which is $7,200, subject to the price limits and rebate reduction rules.

Provincial Rebates and Variations

Some provinces offer additional rebates or have different rules for the provincial portion of the HST.

Ontario: Offers a provincial portion rebate of up to $24,000 on new homes priced up to $400,000.
Nova Scotia: Provides a rebate on the provincial portion of HST for new homes.
New Brunswick, Prince Edward Island, Newfoundland and Labrador: Also have provincial rebates with varying amounts and eligibility.

Check with your provincial government or a tax professional to understand the specific rebates available where you plan to buy.

Rebate for Substantial Renovations

If you renovate an existing home so extensively that it is considered substantially renovated, you may qualify for the GST/HST rebate on the renovation costs.

What Counts as Substantial Renovation?

At least 90% of the interior of the home must be removed or replaced.
The home must be intended as your primary residence after renovation.

This rebate helps homeowners who invest heavily in upgrading older homes.

How to Apply for the Rebate

The builder usually applies for the rebate and reduces the purchase price accordingly.
If the builder does not apply, you can apply directly to the Canada Revenue Agency (CRA) after closing.
You need to fill out Form GST190 (for GST) or Form HST190 (for HST).
Keep all purchase documents, contracts, and receipts as proof.

Important Tips for Home Buyers

Confirm eligibility early: Ask your builder or real estate agent about GST/HST rebates before signing the purchase agreement.
Understand the price limits: Homes priced above $450,000 may not qualify for the full rebate.
Consider resale homes carefully: GST/HST rebates do not apply to resale homes unless they have been substantially renovated.
Consult a tax professional: Tax rules can be complex, and a professional can help you maximize your rebate.

Summary

The GST/HST rebate programs provide valuable savings for Canadian home buyers purchasing new or substantially renovated homes. Knowing how these rebates work and what qualifies can reduce your upfront costs significantly. Make sure to check both federal and provincial rebate options, understand the eligibility criteria, and apply promptly to benefit from these programs.

If you are planning to buy a new home, take the time to explore GST/HST rebate options. This knowledge can help you keep more money in your pocket and make your home purchase more affordable. For personalized advice, consider consulting a tax expert or your real estate professional.