The Ontario GST/HST New Housing Rebate is a valuable financial relief for individuals who purchase, build, or substantially renovate a home in Ontario. This rebate allows eligible applicants to recover a portion of the Harmonized Sales Tax (HST) they paid, making homeownership and renovations more affordable. The rebate consists of both provincial and federal portions, each with specific eligibility criteria and application procedures.
Key Takeaways
The rebate includes both provincial (PST) and federal (GST) portions of the HST, with specific rebate amounts and limits for each.
Eligible applicants can claim a provincial rebate of up to $24,000 for new homes or condos and up to $16,080 for most renovations.
The federal rebate is up to $6,300 but is phased out for home purchases above $350,000 and completely unavailable for purchases above $450,000.
To apply for the rebate, applicants must submit the required forms, including Form RC7191-ON, GST191 Ontario Rebate Schedule, along with supporting documentation.
Common mistakes to avoid when applying include incorrect form submission, missing documentation, and claiming ineligible properties.
Understanding the Ontario GST/HST New Housing Rebate
The Ontario GST/HST New Housing Rebate is designed to help homebuyers recover some of the taxes paid on purchasing a new home or substantially renovating an existing one. This rebate can significantly reduce the financial burden associated with buying a new property or undertaking major renovations.
Provincial and Federal Portions
The rebate consists of both a provincial and a federal portion. The provincial portion in Ontario (8%) is eligible for a 75% rebate up to a maximum of $24,000 for purchases of new homes or condominiums. For most renovations, the maximum rebate is $16,080. The federal portion (5%) is eligible for a 36% rebate up to a maximum of $6,300. However, the federal portion is gradually phased out for purchases above $350,000 and is completely phased out for purchase prices of $450,000 or higher.
Eligibility Criteria
To qualify for the rebate, the purchased home must be located in Ontario and intended for use by the buyer or their spouse/common-law partner. Additionally, the purchase price must be less than $450,000 to qualify for the federal rebate. This applies whether you purchase a new house built by a developer or engage professionals to build a new house on land that you own or lease, including pre-construction condos.
Rebate Amounts
The maximum Ontario new housing rebate amount available is $24,000. Most of the time, developers will automatically include the HST Residential Rebate in the purchase price of the home, simplifying the process for buyers. This rebate can be a crucial factor in navigating pre-construction: essential closing costs, including details on HST rebates, Tarion warranty fees, final deposits, legal fees, and land transfer tax in Ontario for pre-construction condos.
Eligibility for the Ontario New Housing Rebate
Qualifying Properties
You are eligible to claim the Ontario new housing rebate if you bought a new or substantially renovated house (including a new condominium unit, mobile home, or floating home) from a builder or you bought a share of capital stock of a co-op. The house must be located in Ontario and used as your or your relation's primary place of residence.
Eligible Applicants
For houses located in Ontario, you may be eligible to claim the Ontario new housing rebate if you are not eligible to claim the new housing rebate for some of the federal part of the HST only because the fair market value of the housing exceeds $450,000. An Ontario new housing rebate will be available (up to the applicable maximum of $24,000), regardless of the fair market value, as long as all other conditions for claiming the rebate are met.
Purchase Price Limits
An Ontario new housing rebate may be available even if the fair market value of the house is $450,000 or more. You are eligible to claim an Ontario new housing rebate if you are an individual who paid the HST to build or substantially renovate a house, build a major addition that forms part of a renovation of your house, or convert a non-residential building to residential use. The house must be located in Ontario and used as your, or your relation’s, primary place of residence.
How to Apply for the Ontario New Housing Rebate
Required Forms
To apply for the Ontario new housing rebate, you need to complete several forms. Form RC7191-ON, GST191 Ontario Rebate Schedule is essential if the house is located in Ontario. Additionally, you must fill out Form GST191, GST/HST New Housing Rebate Application for Owner-Built Houses. If the builder pays or credits you with the rebate amount, you will also need Form GST190 and Form RC7190-WS.
Application Process
The application process involves several steps:
Complete the necessary forms, including Form RC7191-ON and Form GST191.
If applicable, fill out Form GST190 and Form RC7190-WS.
Submit the completed forms to the CRA.
You can send your rebate claim online using My Account. Upload Form GST191-WS, Construction Summary Worksheet, before filling out the information from Form GST191. For owner-built houses, also complete Form RC7191-ON online.
Important Deadlines
Ensure you submit your application within two years from the date of possession of the new house. Missing this deadline can result in the rejection of your rebate claim.*
Rebate for Substantial Renovations and Major Additions
Definition of Substantial Renovation
A substantial renovation involves major changes where the interior of a building is essentially gutted. Generally, 90% or more of the interior of the existing housing has to be removed or replaced to qualify as a substantial renovation. This is often referred to as the 90% test.
Eligible Renovation Costs
Certain expenses qualify for the rebate, while others do not. Part C of the application form lists the expenses that qualify. For example, if a 700 square foot bungalow is being renovated and a 100 square foot addition is added, the 90% test does not consider the addition. However, if the renovation of the 700 square foot bungalow is found to be a substantial renovation, the GST/HST paid on the addition is also eligible for the GST/HST new housing rebate.
Application Procedure
To apply for the rebate, you need to fill out specific forms. Ensure that you include all necessary documentation to support your claim. The forms you have to fill out for an owner-built house are detailed in the application guidelines.
GST/HST New Residential Rental Property Rebate
The GST/HST New Residential Rental Property Rebate is designed to help investors recover some of the GST or the federal part of the HST paid on new or substantially renovated rental properties. This rebate program allows investors to receive up to $30,000 in HST paid on their new investment property.
Common Mistakes to Avoid When Applying
When applying for the Ontario GST/HST New Housing Rebate, it's crucial to avoid common mistakes that can delay or even disqualify your application. Ensuring accuracy and completeness in your submission is key to a successful rebate claim.
Incorrect Form Submission
One of the most frequent errors is submitting the wrong form. Make sure to choose the correct application type that applies to your situation. For instance, use Application Type 1A if the builder is paying or crediting you with the amount of the rebate.
Missing Documentation
Incomplete applications are often due to missing documentation. Ensure all required parts, such as Part D – Builder or Co-op Information, are filled out and signed by the appropriate parties. Missing documents can lead to delays or rejection of your application.
Ineligible Property Claims
Claiming a rebate for an ineligible property is another common mistake. Verify that your property meets the eligibility criteria before applying. Misrepresentation of property details can result in disqualification and potential penalties.
Frequently Asked Questions About the Ontario New Housing Rebate
General Queries
The HST rebate in Ontario is a financial return provided to homebuyers who purchase a new or substantially renovated home, helping to offset the Harmonized Sales Tax paid during the purchase. Buyers of new or substantially renovated homes intended as their primary residences can apply for this rebate.
Specific Scenarios
Individuals who recently purchased a new or renovated house and meet the following criteria: the purchased home is located in Ontario and is for the use of themselves or their spouse/common law partner. In addition, the purchase price must be less than $450,000 in order to qualify for the federal rebate.
Contact Information
For more information or assistance with your application, you can contact the Ontario Ministry of Finance or visit their official website. They provide detailed guidelines and support for applicants.
Conclusion
The Ontario GST/HST New Housing Rebate provides significant financial relief for individuals purchasing, building, or substantially renovating homes in Ontario. By offering rebates on both the provincial and federal portions of the HST, the program helps to alleviate some of the financial burdens associated with homeownership. With a potential rebate of up to $30,000, this initiative is a valuable resource for new homeowners and renovators. Understanding the eligibility criteria and the application process is crucial to maximizing the benefits of this rebate. Whether you are buying a new home, building one, or undertaking major renovations, the Ontario GST/HST New Housing Rebate can provide substantial savings, making homeownership more accessible and affordable.
Frequently Asked Questions
Who qualifies for the Ontario New Housing Rebate?
Individuals who recently purchased a new or substantially renovated house in Ontario for personal use or for their spouse/common-law partner are eligible. The purchase price must be less than $450,000 to qualify for the federal rebate.
What is the maximum rebate amount for the provincial portion?
How is the federal portion of the HST rebate calculated?
What forms are required to apply for the Ontario New Housing Rebate?
Can I claim the rebate if I built my own house?
Yes, if you personally built a custom home or had a professional build one for you within the past two years, you may be eligible for an HST rebate up to $16,080 for the provincial portion.
Is the GST/HST rebate included in the purchase price of a new home?
Disclaimer: The information provided in this blog pertains to Ontario GST/HST rebate and its policies, which may be subject to change at any time. While we strive to ensure accuracy and up-to-date content, we recommend consulting the official Government of Canada website for the most current information. This blog is intended for general informational purposes only and does not constitute legal or professional advice.