Understanding the GST/HST New Housing Rebate in Ontario
If you’ve recently purchased a new home or undertaken substantial renovations on your existing property in Ontario, you may be eligible for the GST/HST New Housing Rebate. This government program is designed to reduce the tax burden associated with purchasing or renovating homes by refunding a portion of the Goods and Services Tax (GST) or the Harmonized Sales Tax (HST). Here's everything you need to know about how this rebate works, whether you're buying a new home or renovating one.
What is the GST/HST New Housing Rebate?
The GST/HST New Housing Rebate allows homeowners to recover part of the GST (5%) or the federal and provincial portions of the HST (13% in Ontario) paid on the purchase of a new home or the costs associated with substantial renovations. This rebate is aimed at making homeownership and renovations more affordable for Canadians.
Who is Eligible for the GST/HST New Housing Rebate?
The rebate applies in two major scenarios:
Purchasing a New Home:If you’ve bought a newly constructed home, a condominium, or a co-operative housing unit from a builder, you may qualify for the rebate.
Substantially Renovating an Existing Home:If you’ve significantly renovated your existing home or converted a non-residential property into a home, you may also qualify for the rebate.
In both cases, the property must be intended as your primary residence or that of a close relative.
GST/HST New Housing Rebate for New Home Purchases
Eligibility Criteria for New Homes
To qualify for the rebate when purchasing a new home:
The home must be newly constructed and purchased from a builder.
It can include freehold homes, condominiums, and co-operative housing units.
The property must be used as a primary residence by you or a close relative.
The federal portion of the rebate applies only to homes priced $450,000 or less, while the Ontario rebate has no price limit.
Rebate Amount
Federal Rebate: Covers up to 36% of the GST portion (5%), with a maximum rebate of $6,300 for homes priced at $350,000 or less. The rebate is phased out for homes priced between $350,000 and $450,000 and eliminated above $450,000.
Ontario Rebate: Covers 75% of the provincial HST portion (8%), up to a maximum rebate of $24,000. Unlike the federal rebate, the Ontario portion is available regardless of the purchase price.
How It Works
In most cases, the builder will apply for the rebate on your behalf and adjust the purchase price to reflect the rebate amount.
If the builder doesn’t apply for the rebate, you can claim it directly by completing the required forms and submitting them to the CRA.
GST/HST New Housing Rebate for Substantially Renovated Homes
What Qualifies as a Substantial Renovation?
For a renovation to qualify as "substantial":
At least 90% of the interior must be removed or replaced, excluding structural components like the foundation or roof.
Examples include replacing walls, flooring, plumbing, and electrical systems or adding major extensions.
Cosmetic changes, like repainting or replacing cabinets, do not qualify.
Eligibility Criteria
The home must be your primary residence or that of a close relative after the renovation.
If you’ve purchased a substantially renovated home from a builder, you may also qualify.
Rebate Amount
Federal Rebate: Similar to new homes, this rebate covers 36% of the GST portion for renovation costs, with the same price-based limits as new home purchases.
Ontario Rebate: Covers 75% of the provincial HST portion, up to $24,000, with no cost limits.
Eligible Costs
You can claim the rebate for HST paid on:
Materials such as lumber, flooring, and insulation.
Labor and contractor costs.
Equipment rental directly related to the renovation.
How It Works
You need to complete the appropriate forms (e.g., GST191 for owner-built homes) and provide supporting documentation, such as:
Receipts and invoices for materials and labor.
Proof of occupancy.
Before-and-after photos of the renovation (optional but helpful).
Federal vs. Ontario Rebate: Key Differences
Aspect | Federal Rebate | Ontario Rebate |
Maximum Home Price | Limited to homes under $450,000 | No limit on home price |
Rebate Coverage | Up to 36% of GST portion (5%) | Up to 75% of provincial HST (8%) |
Maximum Rebate Amount | $6,300 | $24,000 |
Applies to Renovations? | Yes | Yes |
How to Apply for the GST/HST New Housing Rebate
Required Forms
For new homes: Form GST190 and the Ontario Rebate Schedule (RC7190-ON).
For renovations: Form GST191 for owner-built homes, plus the Ontario schedule.
Supporting Documentation
Purchase agreements or renovation contracts.
Proof of HST payment (invoices, receipts).
Evidence of occupancy (utility bills, mail showing your address).
Submission Timeline
Applications must be submitted within two years of:
The date you take possession of a new home.
The date you occupy a substantially renovated home.
Additional Considerations
Rental Properties: If the home is used as a rental property, you are not eligible for this rebate. Instead, you might qualify for the New Residential Rental Property Rebate, more on that in an upcoming blog.
Non-Qualifying Renovations: Partial renovations or cosmetic upgrades that do not meet the 90% threshold do not qualify.
The GST/HST New Housing Rebate offers significant financial relief for Ontario homeowners purchasing new homes or undertaking substantial renovations. With federal and provincial components, it’s possible to recover thousands of dollars in taxes, making homeownership and major projects more affordable. Understanding the eligibility requirements, rebate amounts, and application process is crucial to claiming the rebate successfully. If you’re planning a new home purchase or a major renovation, make sure you take full advantage of this program.