Goods and Services Tax (“GST”) will typically be collected on the sale prices of most goods and services in Canada. Although GST does not need to be collected in respect of every home purchase, if you are looking to buy a newly constructed or substantially renovated home, the entire purchase price will be taxable. Fortunately, you may qualify for a rebate of a portion of the GST payable through Canada Revenue Agency’s (“CRA”) “GST/HST New Housing Rebate”.
In order to qualify for the GST/HST New Housing Rebate, the purchase price of the home must be less than four hundred fifty thousand ($450,000.00) dollars, before tax. Further, you must buy or build the home for use as the primary place of residence for yourself or your relation. Your “relation” can include your parents, siblings, children or other descendants, as well as your spouse, common-law partner, former spouse or former common-law partner. Thus, if you or any of your relations are going to occupy the home as a primary residence, you may be eligible to recover some of the GST paid.
Your “primary place of residence” will be the home that you or your relation intends to live in on a permanent basis. To determine whether the home is a primary place of residence, the CRA may consider several factors, including without limitation:
(a) whether you or your relation considers the home to be your or your relation’s main residence, respectively;
(b) how long you or your relation actually lives in the home;
(c) how the home is designated on personal and public records; and
(d) tax returns filed by you or your relation
When buying a new home from a builder, you can take advantage of the GST/HST New Housing Rebate in a few different ways. If you pay the full GST to the builder on closing, then you may apply directly to the CRA to receive your rebate; however, many builders take care of this process for you by giving the buyer a credit for the GST/HST New Housing Rebate and then collecting it from the CRA on behalf of the buyer. This reduces the amount of money that the buyer needs in order to complete their purchase and eliminates the need for the buyer to apply for the rebate themselves. You should check with your builder to determine if they will provide this additional service.
At KH/Dunkley Law Group, we like to stay ahead of the curve when it comes to information regarding your home purchase. Whether you are buying a resale property or a new construction, we can provide you with the most up-to-date information regarding the taxes payable and rebates available on your purchase. Further, we always ensure that our clients are receiving the correct credit from the builder for the GST/HST New Housing Rebate, or, if the builder is not providing a credit, we advise our clients on how to obtain their credit directly from the CRA.
Please feel free to contact our office for more information regarding the GST/HST New Housing Rebate.
This memorandum is for informational purposes only, does not constitute legal advice or an opinion, and does not create a solicitor-client relationship. This is an overview and is not intended to be a complete and exhaustive explanation of the concepts covered. This information may become inaccurate based on passage of time or changes in the law. Nothing herein should be relied upon without seeking the advice of a lawyer.
Written by Alexandra Shaffer
Barrister and Solicitor with KH/Dunkley Law Group