GST Housing Rebates

By Richard Rizzo, Senior Tax Manager

When you purchase a new home or make renovations to your existing home, you generally pay GST on the new home or your renovation expenses. Under the general GST rules one cannot recover the tax paid. However a housing rebate is available if certain conditions are met.

For what transactions is the rebate available?
A housing rebate is available on the purchase of a new home intended to be the primary place of residence. Rebates may be claimed when the taxpayer is buying the house and buying or leasing the land. In most cases when the new house is part of a new subdivision the builder will apply for the rebate on behalf of the purchaser. Rebates are also available on qualifying mobile homes, floating homes, bed and breakfast establishments and also new residential rental property subject to additional conditions.

The rebate is also available for renovations or additions to an existing home as long as they are ‘substantial’ meaning all or ‘substantially’ all of the building, other than the foundations, exterior walls, interior supporting walls, floor, roof and staircases, has been removed or replaced.

How do we define ‘all or substantially all’?
The Department of Finance’s view is that ‘all or substantially all’ means 90%. This term is not legislatively or judicially defined, and there have been cases where a smaller percentage was accepted as “substantially all.” In the absence of a simple mathematical formula in the Act, the definition of ‘substantially’ would only be valid with reference and in significance to the specific context in which it is found and therefore must be treated on a case-by-case basis.

How much is the rebate?
Subject to other requirements, the rebate allowed is equal to 36% of the GST paid limited to $8,750. However this rebate is gradually clawed back for homes purchased for a price between $350,000 ($374,500 for homes on leased land) and $450,000 ($481,500 for homes on leased land). The rebate is eliminated beyond these respective limits.

What expenditures qualify and when?
A rebate may only be applied for once for a particular qualifying new or substantially renovated home. Tax paid on items including building materials, architectural fees, connection and installation of electrical power and construction of a patio and open deck may usually be included in the tax rebate calculation. Taxes paid on power tools, area rugs, moving expenses and home entertainment systems are not eligible. A detailed description of the renovations and construction carried out and all invoices must be provided when applying for the rebate.

HST is here on July 1st - Be prepared with our free guide

What our Clients Say

Joanne Pellegrino, Accountant, Izumi Outdoors Inc.

"In the three years that Ive been dealing with SB Partners I have always found them to be courteous, thorough and professional. Their work on our annual statements and tax returns is exceptional and their expertise makes my job a whole lot easier."