This can cost thousands and must be paid on closing... there are rebates available,
HST is the largest additional expense for a pre-construction home purchase. HST/GST is not charged at the point of sale and therefore is not included in the original purchase price but rather is a tax levied on it. For a typical sale this can cost thousands and must be paid on the registration date. Fortunately, there are rebates available, to allow homeowners to claim back a portion of the HST paid. So, here’s what you need to know.
The GST/HST New Housing Rebate
This Rebate is available for anyone in the province who purchased through a builder. In Ontario, since July 2010, you will need to pay tax on the purchase price of your pre construction unit at closing.
There are two rebates that can be claimed for those who pay and plan to rent out their properties. These can equate to up to $30,000 in refunds from the CRA, and back in your account!
1. The new housing rebate: The equivalent of 36% of the GST that all buyers pay on 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. With Toronto’s soaring prices this is a less popular option. However, if you’re buying a home priced above $350,000 but less than $450,000, there is a partial rebate that can be claimed. The new house HST rebate in Ontario essentially kicks back 75% of the Ontario portion of the HST, up to a new home purchase amount of $400,000. This results in a maximum rebate at a provincial level of $24,000 ($400,000 x 0.08 x 0.75).
2. Ontario and HST: The rebate is 36% of the federal component (the GST) of the tax. There may be additional provincial rebates available for the remainder of the HST.
Ontario HST Rebate New Home Eligibility
You may be eligible for an rebate if you have done the following in Ontario:
-Purchased a newly constructed home
-Purchased a newly constructed condo
-Substantially renovated a house or condominium
-Contracted someone to extensively renovate a home or condo
-Bought shares in a newly constructed cooperative housing project
-Converted a non-residential property into a home
Do you qualify?
If you paid HST on closing and are renting it out for 12 consecutive months within the first 24 months, let MCR assist you.
Filing must be done on fair market value of the property at the time of the closing. The CRA monitors the property value on the day of registration and in the event the value of the property appreciated higher than the original purchase price, the rebate amount will be reduced accordingly.
This rebate is not automatic. It must be applied for manually by the Buyer or the Buyer’s Representative, the builder can not process. For this reason, it’s important to remember to get the filing submitted. If your lawyer is not already conducting as part of their closing package, Menkes Rental Suites Management can provide this service for you.
A word to the wise for anyone purchasing a home that is claimed as a primary residence but doesn’t actually plan to move in. The CRA has become quite resourceful and the penalties are harsh. Let us help you file accordingly.