Are you a lucky owner of a new house or condo? Congratulations! You did it! But did you know that you may be eligible to apply for GST/HST rebate program introduced by CRA and receive your tax money back? Here is an article provided by MLK Law that highlights everything you need to know about HST returns.
As a counter measure to increased real estate prices across country, Canadian Government has introduced HST rebate program, which allows home buyers to reimburse part of their taxes.
When purchasing a house, you are charged HST (Harmonized Sales Tax), which is a combined tax of 5% of federal tax and 8% provincial tax. In most cases, HST rebate is already deducted from a purchase price you see and pay to the builder. Which means, that when you signing a purchase agreement, you give your builder the right to apply for HST discount and receive it for you. If your HST rebate is not included in purchase price, you may apply for it, if you meet certain criteria.
Purchased property must be a primary residence for you or your immediate family (spouses, common-law partner, blood relatives, adopted children). To prove that this particular property is your primary residence it has to be shown on your private and public records, for example, driving license. In other words, if an individual has purchased property to flip it for profit, he/she will not be eligible to apply for HST Rebate.
Are You Eligible?
To qualify for HST Rebate programs you have satisfy one of the requirements below
- You have purchased a newly constructed home or condo
- You have built a home
- You have hired a contractor to build a house
- Your property is located in Ontario
- You have done a significant home renovation or hired somebody to do that for you (at least 90% of interior must be replaced)
- You have extended your property by major addition that at least doubles the size of the living area
- You have reconstructed your house after a fire
- You are the owner of shares of newly constructed housing project
- You have rebuild and industrial or commercial premises into residential property
Amount of possible tax return, varies depending on property type. If you have purchased a condo or townhouse, you may receive up to $30,000 back. In case you have significantly rebuilt and renovated your property, you may be eligible for over $16,000.
New home buyer can apply for 36% rebate of the federal tax if the house costs no more than 350,000. For new homes priced between $350,000 and $450,000, the rebate on the federal portion of the tax rebate would be reduced proportionately. Houses that exceed $450,000 are not eligible for federal tax return. However, despite the property price, you may apply to 75% of the provincial portion of HST, which may not exceed $24,000.
Application for HST Rebate must be filled and sent within two years of your property closing date. In case you are applying for an HST in virtue of major renovation, you have up to 2 years after completion of construction.
HST Rebate program allows buyer to get approved for mortgages more easily, and is a great asset for future investments.
Nevertheless, applying for HST Rebate can be difficult and confusing process, so we recommend to seek professional advice. If you need a professional legal advice regarding HST rebate program application, do not hesitate to contact MLK Law – we can help!