Author: Warren Gilmore - Law Student
Edited By: Ryan Carson
Purchasing a new build home is a process that differs from traditional home buying in many ways. When purchasing a traditional, preexisting home, the Agreement of Purchase and Sale will normally provide that taxes (GST/HST), are included in the purchase price. However, this is not the case when purchasing a newly built home. These homes will have taxes applied to the purchase price, adding thousands of dollars to the overall cost of the transaction.
In response to these concerns, the government has implemented the GST/HST New Housing Rebate. Filling out the appropriate documentation can save new home buyers thousands of dollars in applicable taxes.
The value of the rebate is dependent in part on the purchase price of the home, providing a rebate to consumers of 36% of the federal allotment of HST. This amount typically represents 5% of the purchase of the property. The newly built home is required to have a purchase price of $350,000 or less before taxes. Alternatively, for homes with a purchase price between $350,000 and $450,000, the HST rebate begins to decrease. Further, for homes with a purchase price in excess of $450,000 there is no federal HST rebate available. Regardless of the purchase price of the property, the maximum rebate amount available for the federal allotment of HST is capped at $6,300.
The province of Ontario offers new build home buyers additional rebates of 75% of the province’s allotment of the applicable sales tax, typically representing 8% of the purchase price of the property. This provincial rebate is available for all purchases of newly built residential property, no matter the purchase price. However, this rebate is capped at a maximum of $24,000, regardless of the purchase price of the property.
While Corporations and other business partnerships are not eligible for these rebates, individual home buyers are eligible so long as:
1) The purchased property will be registered as your primary place of residence.
2) The property is purchased from a builder and conforms to a new or predominantly renovated single detached, townhouse, or condominium.
The New Housing Rebate program is not a substitute for the First Time Home Buyers Rebate. First time home buyers are also eligible for the GST/HST New Housing Rebate so long as the conditions listed above are met.
In order to apply for the rebate one of two separate documents are required to be submitted. If you purchase a home from a builder then you will need to complete Form GST190. This document requires information regarding your personal contact, the listing of your primary place of residence, along with information regarding the specifics of the property and the builder.
Conversely, if you sustainably renovate a preexisting house rather than purchasing one from a builder, you will be required to submit Form GST191, and provide similar information regarding yourself and the use of the property.
An experienced real estate lawyer will be able to walk you through this process and ensure that these forms are completed accurately and effectively, saving you potentially thousands of dollars come tax time.
Articles written by Warren Gilmore:
Assignment of an Agreement of Purchase and Sale Separation Agreements and the Transfer of Matrimonial Property Estate Planning for Reconstructed Families
Sale of Canadian Property by a Non-Resident
The Prudent Real Estate Investors Checklist Alternative Approaches To Purchasing A Recreational Property Power of Attorney General Overview Power of Attorney General Overview - Continued Non-Resident Speculation Tax
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