What Is the HST Rebate on a New Build?
Purchasing a new residential
home or condominium from a builder may qualify you for the HST Rebate on the
property. The program is called the HST New Housing Rebate and it has been put
in place by the provincial and federal governments. The Canada Revenue
is responsible for running the program and issuing rebates to
How does the HST work on new
build home sales? The way that the HST is charged on a new property will depend
on whether the home will be a primary home for the purchaser or if the property
will be used as an investment property. In both cases, the property will be
eligible for an HST New Housing Rebate, but the actual closing costs for the
purchaser and the method of claiming the rebate can differ significantly. The
typical charge for HST on a new property ranges from $19,000 - $31,000, so it
is very important to understand how the HST works.
In the case that the new
property will be owner-occupied as a primary residence, the builder will
typically pay the HST on the purchaser’s behalf. The HST is not added into the
purchase price of the property and the builder will apply for the HST rebate
for the property.
The purchaser will be
responsible for paying the HST due on the property when the property will be
used as an investment property. This HST amount will be due along with all of
the other closing costs by the final closing date. The purchaser will be
responsible for filing for the HST New Housing Rebate. Statistics show that only a small percentage
of the potential HST rebates were claimed in 2014. This means many investors
are not receiving the money that they are entitled to.
Paying the HST on an Investment Property
The considerable (and often
surprising) HST closing costs must be paid in full by the final closing date.
If the payment is not made, the entire closing may fall through. This can lead
to loss of deposit for the property and, in some cases, the builder may pursue
legal action for damages.
The HST responsibilities are
still relatively new and many investors find out the hard way that they are
responsible for this significant cost, sometimes just days before it is due on
the final closing date. It is a large amount of money to pay on top of the
closing costs that are already due. Where can investors turn for financial help
paying the HST?
HST Rebate Loans
For investors scrambling to
secure funds for the HST amount due on closing, an HST Rebate Loan is both a
viable and effective method of short-term financing. HST Rebate Loans are
available for investors who qualify for the HST New Housing Rebate and also
have acceptable credit and debt ratios.
An HST Rebate Loan
can be secured as a second mortgage against the
investment property or issued as an unsecured loan. The loan will provide the
funds necessary to pay the HST due on closing and will remain open until the
HST rebate has been received from the CRA. The investor pays a reasonable fee
for the service as well as any interest that is accumulated during the HST
HST relief companies provide professional financing services
for investors who are eligible for the HST rebate on a new build. Discover the
services and convenience they can provide for your investment property closing