Buying a home, especially a newly built home, is already an expensive process in Canada. Along with land, construction, and property taxes, there’s also that troublesome GST or HST to pay. While GST/HST isn’t charged on purchases of an existing property, newly built homes will have the tax levied on them, and it can add thousands to the cost of a typical home.
Fortunately, The Canada Revenue Agency (CRA) offers relief from this cost in the form of the GST/HST New Housing Rebate, and it’s one thing you’ll want to add to your list of to-dos when budgeting for your new home. In this case, filling out a single form can save you thousands of dollars in taxes if you’re buying a newly constructed home.
What is the GST/HST New Housing Rebate?
The GST/HST new housing rebate is a rebate provided to homebuyers to apply for a refund on GST/HST paid on their homes.
When you purchase newly built or heavily renovated housing, you would have to pay a sales tax on top of the purchase price which consists of a federal portion and a provincial portion. You pay it for the same reason that you pay sales tax on almost everything else you buy.
Whether you’ll pay GST or HST depends on your province, as will your final tax rate. The GST/HST new housing rebate allows you to take back some of the federal portions of the tax also known as the Goods and Services Tax (GST), and in the provinces, there may also be rebates for the provincial part of the tax.
GST/HST New Housing Rebate Eligibility
Depending on your conditions and province, you may be eligible for both the provincial and federal rebate, only the provincial rebate, or only the federal rebate. you may be eligible for the rebate if any of the following applies:
- you bought a new or substantially renovated house (this includes a condominium unit, a renovated house that has also had a major addition, or a non-residential property that was converted into a house) from a builder, and you paid all of the GST/HST due on your purchase;
- the builder sells you the house and the related land on which the house is located under the same written agreement;
- when you sign the purchase and sale agreement, the house is intended to be the primary place of residence for you or your relation;
- the purchase price for the house (including the land, where applicable), plus the purchase price for a taxable assignment to you of the original purchase and sale agreement (if applicable), before tax, is less than $450,000;
- ownership of the house is transferred to you after the construction or renovation is substantially completed;
- no one occupied the house before possession of the house is given to you and after the construction or renovation is substantially completed; and
- one of the following applies: you, or a relation of yours, are the first occupant of the house; or you made an exempt sale of the house before it is occupied by anyone.
And yes, first-time homebuyers are also eligible for the GST/HST new housing rebate, on top of other programs available to them.
The HST/GST housing rebate is only available to individuals who meet all of the conditions for claiming the rebate. However, it is not available to individuals who co-own the housing with corporations or other partnerships because the rebate is not made available to those entities.
How to Apply for the GST/HST New Housing Rebate
The process for applying for the GST new housing rebate requires submitting at least two mandatory forms available on the government website: one to calculate your GST rebate amount and another as the main application form. For residents of Ontario, British Columbia, Nova Scotia or Saskatchewan which also impose additional provincial new housing rebates, an extra form will need to be filed.
Once complete, the forms must be mailed to the designated tax centers listed on the government website for processing. Although supplementary documents are typically not required upfront, you may receive later requests to provide added proof of occupancy, closing statements or invoices to validate your rebate eligibility.
After submission, it can take up to 6 months to receive your GST new housing rebate payment. Applicants should be aware of a 2-year deadline to file dating back to the determined rebate eligibility base date outlined in the forms. Meeting this cutoff is essential or you risk losing your entitlement to collect the rebate. Putting together the forms promptly and providing any additionally requested documents will help smooth the path to obtaining your full rebate entitlement.
Which form will I need to apply for the GST/HST New Housing Rebate?
There are two types of rebates available with differing rates: rebates for owner-built houses and rebates for housing purchased from builders hence there are two different tax forms for each of them.
- Form GST190
- Form GST191
1. Houses Purchased from Builders
If you purchased your home directly from a builder or developer, you can request to have the builder claim the credit and pay it to you. To do so, complete Form GST190, GST/HST New Housing Rebate Application for Houses Purchased from a Builder, and have the builder submit it to the CRA on your behalf.
If the builder did not pay you the credit, you may apply for the rebate by completing the same forms. You must submit them to the CRA within two years of purchase.
2. Owner-Built Homes
If you built your own home, you can also apply for a rebate of the GST/HST you spent while building the house. To do so, complete Form GST191-WS, Construction Summary Worksheet. Next, complete Form GST191, GST/HST New Housing Rebate Application for Owner-Built Houses, and submit both forms to the CRA.
If you owned the land and you paid a builder to build your house, you also have to complete these forms. In both cases, the rebates must be claimed within two years of the date the house is completed.
For example, if you bought a home and land from a developer, you would request the developer to give you the rebate and submit Form GST190 on your behalf. However, if you bought the land and then hired your own architect, builder, and workers, you would file GST191 to claim your GST/HST rebate.
Similarly, if you hired a builder to do substantial renovations on your home or if you did them yourself, you also need to file Form GST191 to claim your rebate.
2022 New Housing HST Rebates in Canada
The Canadian Government encourages people to own a house, and as of 2022, close to 70% of Canadians owned their home according to a national household survey. Millions of people in Canada also own a second property, often a cottage or investment property. Real estate markets such as Toronto and Ottawa have a significant amount of home buyers that are new to the country, many people buying or looking to buy are unaware of the new condo HST rebate. People acquiring brand new property in the GTA for investment purposes pay tens of thousands of dollars in HST, so they must file for a new house rebate otherwise they will not get a single dollar back. Many new Canadians are unaware of the rebate since they are not always familiar with the Canadian property market and tax code, but in most cases, their real estate agent will advise them of the rebate during the purchase process.
The GST/HST new housing rebate is a simple rebate to claim. However, unlike some other rebates and incentives, it’s not automatic. Instead, it requires you to apply manually. It’s important that you don’t forget to do this at tax time!
Filing Taxes concisely deals with several complex issues; it is recommended that accounting, legal or other appropriate professional advice should be sought before acting upon any of the information contained therein. Our experienced and professional team at Filing Taxes is here to set you on the right path considering your personal business situation. Feel free to reach out to Filing Taxes at 416-479-8532. Schedule an NTR engagement appointment with us and take the first step towards proper management of your finances.
Frequently Asked Questions
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Disclaimer: The information provided on this page is intended to provide general information. The information does not consider your personal situation and is not intended to be used without consultation from accounting and financial professionals. Salman Rundhawa and Filing Taxes will not be held liable for any problems that arise from the usage of the information provided on this page.