We’re here to clear the air surrounding the HST rebate in Ontario and your Toronto real estate purchase. Buying Toronto real estate can be exciting, but as soon as you mention HST — the excitement fades and the confusion sets in. When it comes to the HST rebate form for a rental property we’ve got you covered.
Harmonized Sales Tax (HST) was implemented in Ontario in 2010, which raised the tax on new homes to 13% (HST). To help homeowners deal with the growing cost of buying a new home, the HST rebate program was introduced to reimburse buyers for a portion of the additional new home tax.
There are two ways buyers can get an HST rebate in Ontario:
- HST New Housing Rebate – when you buy a newly built or substantially renovated* home or condo
- New Residential Rental Property Rebate (NRRPR) – when you buy a newly built home or condo for the intent of renting
Seems simple enough right? Not so much. The way these HST rebates apply in the buying process is different whether you’re an end-user or an investor.
Let’s say two different buyers, one an investor and one an end-user, are each buying a $500,000 pre-construction condo in the same development.
Both have to pay the same deposit structure in the early phases of their pre-construction condo timeline, but as the condo approaches its registration date (3 to 4 years after the initial payments), in addition to the standard fees due at closing the investor has to pay their rebatable portion of their HST to a maximum of $24,000 on a $500,000 condo.
The end-user will also have to pay her closing fees — Land Transfer Tax, development charges, legal fees — but does not need to pay the additional $24,000 in HST.
HST REBATE IN ONTARIO FOR END-USERS
The biggest difference is that when an end-user buys a pre-construction condo from a builder, typically the Ontario HST rebate is assigned to the builder directly upon closing, allowing the builder to essentially deduct the cost of the HST from the purchase price.
Note: While most New Home Rebates will be applied at the time of purchase, this may not always be the case, be sure to consult your real estate agent and lawyer regarding your purchase and the HST rebate form.
HST REBATE IN ONTARIO FOR INVESTORS
In an effort to make things slightly more challenging for investors, they must pay the HST upfront at closing and have their lawyer file for a full HST rebate (HST rebate form for rental property), refunded 4 to 6 weeks later provided they have a one year lease in place. There is absolutely no need for an HST rebate Ontario calculator as you’ll get a full refund.
Related: Understanding Closing Costs Before You Buy That Property
How Much is the HST Rebate in Ontario?
When it comes to new real estate purchases in Toronto, Ontario we can assume the majority of purchases will cost at least $450,000. Simply put, any property that costs $450,000 or more will receive the maximum HST new housing rebate of $24,000.
The HST rebate is a refund received by qualified homebuyers on a portion of the purchase amount of their new home. While the exact refund amount may differ, generally speaking, the maximum rebate at the provincial level is $24,000 (max $400,000 x 0.08 x 0.75) while the maximum federal rebate is $6,300 (max $350,000 x 0.05 x 0.36). As mentioned above, there is no need for an HST rebate Ontario calculator as you’ll receive a full rebate on the amount you paid.
The federal rebate is equal to 36% of the federal portion of GST/HST, to a maximum of $6,300 and the Ontario provincial rebate is equal to 75% of the Ontario portion of GST/HST, to a maximum of $24,000.
The provincial rebate amount caps and is applicable on the first $400,000. So the maximum new housing rebate amount available in Ontario is 6% of $400,000, which amounts to $24,000. While the purchase price of homes should be less than $450,000 in order to qualify for the Federal rebate, for homes valued above $450,000, homebuyers may still apply for the provincial rebates.
To be eligible for the HST housing rebate and the GST housing rebate in Ontario, individuals must fulfill all criteria. It would also be worthwhile to point out that those homebuyers who co-own the house with corporations or in a partnership cannot claim the HST rebate. It’s simply because the rebate is not applicable for such types of ownerships.
When purchasing a new property, the applications of rules concerning the HST and GST housing rebates in Ontario may seem a bit complex. However, all things considered, the HST rebate is a provision that to a large extent is beneficial, whether it is HST rebate for first time home buyers in Ontario or investors.
Now that we have a better understanding on the HST rebate and how it applies during the purchase process, let’s talk eligibility.
HST NEW HOUSING REBATE ELIGIBILITY
For anyone planning to live in their new purchase. As per any type of rebate, there are stipulations to be followed that grant you the HST rebate in Ontario.
- The home to which the rebate applies must serve as your principal residence.
- It must also serve as the principal residence for any co-signers of the property.
- You must live there for minimum one year to have the HST rebate in Ontario be viable.
- Be sure to change your address on your drivers license.
If you do not follow the above stipulations or choose to sell or rent your property within the first year, you will be required to pay back the HST rebate in full. For all the specifics regarding GST/HST New Housing Rebate Eligibility, head over to the CRA website.
HST NEW RESIDENTIAL RENTAL PROPERTY REBATE ELIGIBILITY
For anyone planning to rent out their new purchase. The New Residential Rental Property Rebate (NRRPR) is intended for investors purchasing a new home to rent it out as an income property. Both Canadian residents and foreign investors are able to apply for New Residential Rental Property Rebate. In order to be eligible to receive this HST rebate you:
- must have a one-year lease in place, along with an agreement to prove that the new condo or home will be rented to a tenant.
- rent the property for a minimum period of one year from the property’s closing date, not interim occupancy.
Along with your one-year lease and Agreement of Purchase and Sale, have your lawyer fill out the HST rebate form to have the rebate issued four to six weeks after closing. Investors are able to apply for their HST rental rebate in Ontario up to two years after closing. If you fail to file for the rebate within those two years after closing, you may no longer be eligible to receive the money-back.
Related: Flipping Pre-Construction Condos in Toronto – What You Need to Know
HST REBATE CALCULATOR
When it comes to calculating the HST rebate in Ontario, as we know, most pre-construction condos will cost at least $450,000. To make things simple for you, just know that any property that costs $450,000 or more will receive a maximum HST new housing rebate of $24,000.
For new homes with a price of $350,000 or less you are able to receive a maximum HST rebate of $30,000 while homes between $350,000 and $450,000 there is a sliding scale, refer to the CRA’s reference for HST New Housing Rebate Calculator. Are you looking to sell homes or condos in Toronto? Or perhaps you want to look at our condo and home listings in Toronto? Book a Call!
Pierre Carapetian Group Realty makes no warranty, express or implied, nor assumes any legal liability or responsibility for the accuracy, correctness, completeness or use of the information provided. Be sure to consult your lawyer regarding your HST rebate.
*At least 90% of a home’s interior must be transformed to be considered a substantially renovated home.