Thinking of purchasing a home that needs renovating, or maybe a problem-free newly constructed home? If so, you’re looking at spending a pretty penny between the chase price, upgrades, and other big expenses.
Luckily, the Canadian federal government offers the GST/HST New Housing Rebate to assist with the taxes charged on new construction and some renovations. Here is what you need to know.
Key Points You Should Know
- The GST/HST New Housing Rebate helps Canadian individuals recover some of the GST or the federal part of the HST paid for a new or extensively renovated house.
- The maximum rebate you can receive for the GST portion is 36% of the GST tax you paid, up to a maximum of $6,300. The PST portion, on the other hand, varies by the province you live in.
What Is The GST/HST New Housing Rebate?
Canada’s GST/HST New Housing Rebate helps Canadian individuals recover some of the GST or the federal part of the HST paid for a new or extensively renovated house. The house must be used as the individual’s or the individual’s relative’s primary place of residence to be eligible for this rebate.
Of course, the federal government uses different factors to determine if the new construction is your primary residence. That means that if you are building your dream retirement house the construction does not qualify for the GST/HST new house rebate unless you are about to retire and live there. Building a country cottage does not qualify either.
Some things that the government looks for are:
- The amount of time you spend living at the residence
- The address is listed for you on public records.
How Much Can You Save With The GST/HST New Housing Rebate?
The average house price in Canada as of December 2023 was $657K, a 5.1% increase from the same month last year. That number is even higher if you live in a metropolitan city like Vancouver or Toronto, where average home prices are around $1 million.
And that purchase price doesn’t mean that there isn’t work to do in the house to make it your home. Aside from cosmetic changes, like a fresh coat of paint or new light fixtures, you have big expenses like renovations, property taxes, mortgage interest, insurance, and maintenance.
It all adds up quickly. And if costs get out of hand, you may need a personal loan to cover the debt.
Can You Avoid Some Of The Costs If You Buy A New Construction?
Yes and no. A new build adds GST/HST to the cost. General contractors also add these taxes to the price of renovations.
Depending on the price of the home, where it’s located, and all the expenses you incur, you could be saving tens of thousands of dollars with the GST/HST New Housing Rebate.
Who Is Eligible For The GST/HST New Housing Rebate?
There are different eligibility requirements for the GST/HST New Housing Rebate depending on the type of house in question:
Owner-Built House Eligibility Requirements
Individuals who own homes they built themselves may be eligible to receive some or all of the GST/HST New Housing Rebate if they:
- Built, or had someone else build, a house on land that the individual already owned or leased
- Substantially renovated at least 90% of the house
- Renovated and built a significant addition to the house, such as a second-story
- Converted the home from a non-residential property
- Purchased a new or significantly renovated floating home
Note: Individuals who purchase a mobile or floating home can either claim the owner-built new housing rebate or the new housing rebate for a house purchased from the builder.
Eligibility Requirements For A House Purchased From A Builder
To receive some or all of the GST/HST New Housing Rebate, individuals who purchase a home from a builder must have either:
- Purchased a new or significantly renovated house from a builder
- Purchased a new or significantly renovated mobile or floating home from a builder, manufacturer, or vendor
- Purchased a share of capital stock of a co-op where the co-op paid tax for a new or significantly renovated house
- Purchased a new or significantly renovated house from a builder that leased them the land for 20 years or more, or that gives them the option to buy the land
Eligibility Requirements For A Renovated House
For individuals to qualify for the rebate on a renovated home, one of the following criteria must apply:
- The existing house is substantially renovated
- The house is converted from a non-residential property
- The house underwent a major addition, such as a second story
How To Apply For The GST/HST New Housing Rebate?
To apply for the GST/HST rebate, you must submit two forms: the GST190 & GST191. The GST190 is for rebate applicants with a home purchased from a builder and requires information about the claimant (applicant), house, and builder. The GST 191 is for rebate applicants with a home built by the owner.
If you live in Quebec, you must submit the FP-2190.AC-V form.
You must submit one of these forms with your income taxes within two years of your home’s closing date.
How Much Can You Get Through The GST/HST New Housing Rebate?
The GST/HST New Housing Rebate calculations vary by province since they have various maximum amounts and tax rates.
Overall, the maximum rebate you can receive for the GST portion is 36% of the GST tax you paid, up to a maximum of $6,300.
Note: Your eligibility for this rebate drops down to zero once the house price exceeds $450,000.
The PST portion, on the other hand, varies by the province you live in.
Here’s the maximum PST rebate amount you can get in each province:
Ontario Housing Rebate
The HST rate in Ontario is 13%, made up of 5% GST and 8% PST.
The maximum rebate amount is up to $24,000 if the HST was paid on the purchase of the land, and $16,080 if it wasn’t.
Quebec Housing Rebate
The GST and QST in Quebec are 5% and 9.975%, respectively.
The rebate can be as high as 36% of the GST and 50% of the QST, up to a maximum GST rebate of $6,300 and a maximum QST rebate of $9,975.
Nova Scotia Housing Rebate
The HST rate in Nova Scotia is 15%, which is made up of 5% GST and 10% PST. Nova Scotia residents can receive a rebate of 18.75% of the provincial portion of the HST on a newly constructed home, up to a maximum of $3,000.
British Columbia Housing Rebate
Tax rates in B.C. are 7% for PST and 5% for GST. However, B.C. residents can only receive the PST rebate if the home was purchased or transferred after April 1, 2013. If the home was purchased after this date, the B.C. Transition Tax Rebate will provide compensation.
Saskatchewan Housing Rebate
The tax rate in Saskatchewan for GST is 5%, while the PST is 6%.
Saskatchewan residents can receive a 42% PST rebate if the property price is under $550,000. The higher the purchase price, the lower the rebate rate.
All Other Provinces: GST/HST New Housing Rebate
Canadians in all other provinces can receive a rebate for 36% of the GST tax, up to a maximum of $6,300 as mentioned earlier, without any official PST rebates. Some provinces have provincial rebates that can assist with the lack of a PST rebate.
GST/HST New Housing Rebate Final Thoughts
Buying a home is an expensive and stressful process. Although every cost adds up, you can find some relief with the GST/HST New Housing Rebate. Find out how much you can get back based on where you live in Canada.
