Qualified Purchases for the Ontario HST and GST Rebate
The application is lengthy, but basically: If you purchased a home and rented it to someone, you can get the rebate for GST and HST paid on new appliances (stoves, washers, dryers), renovations (new bathrooms or kitchens), and some other items. You can also get part of the rebate for land you do not rent out but use for “home-related purposes”. If the land is not related to your home, it does not qualify for a rebate.
In all cases, you can get a full GST and HST rebate paid on items purchased for resale. For example, if you operate a store and buy a cash register, the full purchase price (and any HST) is fully rebateable.
A qualifying home is a housing unit which you or a co-owning spouse or common-law partner purchased or otherwise acquired and occupied as your principal residence on the particular day you purchased it, such as:
- Single-detached homes;
- Semi-detached homes;
- Townhouses;
- Mobile homes permanently affixed to a foundation;
- Condominium units.
This will NOT include seasonal cottages, a houseboat, a residential trailer, a home with more than one self-contained dwelling unit, or any non-permanent structure such as tent trailers and travel trailers.
You will be required to complete an Application for Homeowners’ HST/GST New Housing Rebate form. If you are making this application on behalf of your co-owning spouse, provide their information in the top section of the document. The CRA may contact you if additional information or documentation is required to process your application.
Bought a new home or condo recently? Homeowners in Ontario are entitled to a rebate on the harmonized sales tax (HST) and the federal goods and services tax (GST) for new homes. If you’re buying or building a new home, it’s important to understand how the HST & GST new home rebate works so you can take advantage of the savings.
The Harmonized Sales Tax (HST) replaced both Provincial Sales Tax (PST) and the Goods and Services Tax (GST) on July 1, 2010. Under HST, if you buy or build your home, place it into service (that is, make it habitable), acquire an ownership interest in land for personal use if construction hasn’t begun by the end of 2010, or start construction of a substantially renovated home, you must pay HST on the fair market value of the land or improvements.
The HST and GST Housing Rebate in Ontario is a rebate offered to eligible homeowners who have paid the provincial Sales Tax (HST) or the Goods and Services Tax (GST) on their home. The rebate is offered as a percentage of the total tax paid, and can be claimed on your annual tax return.
GST/HST New Housing Rebate Eligibility
The GST/HST new home rebate is a tax relief measure that reduces the amount of GST/HST new home buyers have to pay. The rebate is calculated as a percentage of a newly constructed or substantially renovated home’s purchase price and has been available since January 1, 2008.
The rebate applies to new homes in Canada that are purchased for use as housing or in addition to rental property. It does not apply if the new home will be used as business premises, such as an office. The rebate also does not apply to any costs associated with building materials for use in constructing a home that will be used to earn business income.
The rebate can only offset the amount of GST/HST payable on the new home purchase price. If you are not required to pay any tax, your rebate cannot exceed your actual cost for the new home. The maximum rebate is $24,000 for homes with a $600,000 or less purchase price.
The rebate cannot be used to reduce the amount of GST/HST paid on expenses such as land transfer taxes. If an individual purchase a newly constructed home for family use and is not required to pay any tax, their new housing rebate cannot exceed the home’s purchase price.
An individual who is entitled to the basic personal amount and who was resident in Ontario on December 31 of the previous year qualifies for this rebate if all of the following apply:
- The individual or at least one of a co-owning couple purchased a qualifying home on or after November 19, 2009, and on or before April 1, 2012;
- The individual properly registered for the HST in respect of the purchase under the Excise Tax Act within two years from the date ownership and possession of the qualifying home were transferred to that individual;
- The individual did not receive the HST New Housing Rebate in respect of the purchase of the qualifying home (subsequent owners are ineligible); and
- The qualifying home is located in Ontario when ownership and possession are transferred or when registration for the GST is made earlier.
- Your total household income is $20,000 or less. This is because housing rebates are calculated on household income, not individual income.
- You reside in Canada for at least six months of the year or are considered a full-time student for at least five months.
HST & GST Housing Rebate FAQs
- Who qualifies for HST & GST new home rebate in Ontario?
Owner-occupied residential property includes a house, condominium unit, apartment building, or mobile home that is a person’s primary place of residence and meets certain conditions. If it is not the primary place of residence of the purchaser, then sales tax will be charged on the purchase of an owner-occupied residential property.
The GST New Housing Rebate is available on purchasing a new or substantially renovated house, condominium unit, or apartment building that will become an owner-occupied residence. This rebate does not apply to purchases of mobile homes and certain other housing types which are included in the definition of “eligible dwelling”.
- Who has to pay the tax and how do they report it?
You have to report HST if you are self-employed or rent out your property. Your tenant will charge the appropriate HST on rent if you live in a high-rise building. However, if you rent a house or another type of single-family dwelling, your tenant should be charging 5% HST on rent.
- When does your rebate claim period begin and end?
You can receive HST rebate if your application is received within four years after the end of the claim period of the previous year.
For example, you want to claim your HST HR for 2012. Your application should be received by April 30, 2016.
On the other hand, if you want to claim your rebate for 2013 and later, your application should be received within four years from the end of this claim period. So, for example, you want to claim your rebate for 2015, your application should be received by April 30, 2019.
Your housing rebate claim period will run from January 1 to December 31 of the following year. Even if you did not pay an amount on rent during the previous year but had eligible expenses during this time, you may still be eligible for the housing rebate.
- What supporting documents do you need?
To apply for HST rebate, you will need to fill out Form GST190 Application for Ontario HST New Housing Rebate and Ontario Trillium Benefit (OTB). You can get this form at any local Service Ontario Centre or download it on the Ontario Ministry of Revenue website.
The HST and GST New Home Rebate is a general rebate of the provincial part of the Harmonized Sales Tax (HST) on housing. Depending on your situation, you may be eligible to receive this rebate if you’ve purchased or built a qualifying new house as defined by the Ontario government. If you need help with understanding how much money qualifies under these guidelines, we can walk through all of those details with you so that you know what to expect. Contact us at FShad CPA today!