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What Is the HST Rebate on a New Build Home or Condo?

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What Is the HST Rebate on a New Build or PreConstruction Property?

 
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 HS Rebate, for which there are 2 programs: The HST New Housing Rebate and the HST New Residential Rental Rebate. The program has been put in place by the provincial and federal governments. The Canada Revenue Agency is responsible for running the program and issuing rebates to qualified applicants.  
 
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 Rebate, but the actual closing costs for the purchaser and the method of claiming the rebate can differ significantly. In both cases, most of the HST is built into the purchase price that the buile advertises, less the "HST Rebate amount".  This is the portion of the HST that is either due on closing or for which a credit is applied on the Final Statement of Adjustments.  The typical charge for the portion of HST due on closing for a new property ranges from $16,000 - $29,000, which is not chump change.  So, it is very important to understand how the HST works when buying new real estate from a builder.
 
In the case that the new property will be owner-occupied as a primary residence, the builder will typically pay the portion of the HST due on closing on the purchaser’s behalf. This portion of the HST is not added into the purchase price of the property and the builder will apply for the HST rebate for the property.  This explains the verbage written in most Purchase Agreements that state you are assigning over the right to the builder to claim the HST New Housing Rebate - this is because the standard Purchase Agreement is written assuming the puchase will be the end-user of the property and claim it as their primary residence.  In this case, the builder covers the HST on closing and adjusts it with CRA as a part of their monthly or quarterly HST remittance adjustments.
 
The purchaser will be responsible for paying the portion of the HST due on closing when the property will be used as an investment property (or if the property will be used for any other purpose other than a primary residence for the purchaser or the purchaser's immediate family). 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 Rebate to reclaim this amount due on closing and must have a 1 year lease with a tenant to qualify through the HST New Residential Rental Rebate Program.  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, even when they qualify.  Note that even foreign investors can file for the HST Rebate if they have a 1 year lease in place with a tenant (and, they do not need to be a Canadan citizen, Canadian resident, nor have to have a SIN number).   
 

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 (only introduced in 2010, with the first closings happending a few years afterwards once the new construction was complete) 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 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 Rebate and also have acceptable credit scores.
 
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.  In this sense, it functions as a sort of short-term bridge financing to help an investor close the property until they receive the HST Rebate back from CRA. The investor pays a reasonable fee for the service as well as any interest that is accumulated during the HST rebate process.
 
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 today.

Built a new home - is there an HST rebate?

My dad build a new home on a piece of land that my grandparents own.  Is there any sort of HST rebate for this type of new home?

Answers

By HST Relief (Admin)
Yes, there is.  This is a version of the substantial renovation rebate. Our company, HST Relief, puts together these filings for clients like your father.  The maximum rebate you can receive is $24,000. 
 
Give us a shout at: 1.866.832.1990  or email us at: info@hstrelief.ca
 
 

Qualifying for HST rebate if convert new residential property to commercial

Hi,
 

I am interested in purchasing a new residential unit but plan to convert it into a commercial unit. Will I still be eligible for the HST rebate?

 

Thanks.

Answers

By HST Relief (Admin)
Hi Rene. Good question. The HST Rebate programs in Ontario only apply to principal or primary residences and residential rental properties.  So, if you plan to use the new build investment property for recreation (like a second home or cottage), an office or commercial space, you will not qualify for the HST Rebate even though you will be required to pay a portion of the HST (about 7.8-8%) to the CRA due upon closing, 

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