When someone buys a newly constructed or heavily renovated home, the buyer will be required to pay a GST/HST on top of the purchase price. This sales tax comprises a federal and provincial portion that are kept separate in some provinces while combined in others to form the Harmonized Sales Tax (HST).
The Harmonized Sales Tax (HST) is collected by the Canada Revenue Agency on all new house purchases. Most of the time, the HST does not apply to residential resale properties if the residence has been utilized solely for domestic purposes. If the home was utilized for commercial purposes to a certain extent, the HST would be applied to the property’s portion used for that purpose. For the purposes of charging HST on the sale of a resale property that has been substantially refurbished or a home that has been rebuilt after being damaged by fire, the resale home may be classified as a new home.
The GST/HST new housing rebate may be available to individuals who purchase a new or substantially renovated home for use as their principal residence, provided they meet all other eligibility requirements. In addition, various provincial new housing rebates may be offered for the provincial portion of the HST, even if the GST/HST new housing rebate for the federal portion of the HST is available.
In Ontario:
It’s possible to get a 75% rebate on the PST (the provincial portion of the HST) applicable to the purchase price up to $24,000 in Ontario.
When purchasing a property that costs $350,000 or less before GST, new home purchasers can apply for a 36 percent GST (the federal share of HST) refund that applies to the purchase price, up to a maximum of $6,300. The GST rebate for new homes valued between $350,000 and $450,000 before GST would be lowered proportionately for residences in this range. Any new homes valued at or above $450,000 (before GST) would not be eligible for the refund.
