The HST rebate in Ontario

Everything first-time homebuyers need to know


Are you buying your first home? Then you may be eligible for the HST rebate. It's essential that you understand the basics of the HST rebate as you prepare for the purchase. The HST rebate is intended to help first-time homebuyers through reimbursing the Federal Government's portion of the HST (Harmonized Sales Tax) that new homebuyers are required to pay in taxes when buying their first home.


According to a national household survey conducted this year in 2019, 70% of Canadians own their homes. The Government of Canada has noted that many first-time homebuyers are unaware of the HST rebate and it's importance when they're purchasing a house or condo.


So, here are the basics that you should be aware of so you don’t jump in blind into one of the biggest decisions of your life.


Here is everything a first-time homebuyer in Ontario should know about what the HST rebate is, how it works, the types of properties that are eligible, and the rules on claiming it.


WHAT IS HST REBATE?


The HST rebate was established by the Government of Canada to assist first-time homebuyers who have either purchased new housing; or a newly constructed or significantly renovated housing as you or your family's primary residence. As a first-time homebuyer, you could qualify for a rebate on a portion of the sales tax paid on the purchased property.

According to REM Online, Canada’s premier monthly magazine for real estate professionals, the HST rebate provides eligible first-time homebuyers who are purchasing a new home or condo with a rebate on a portion of the HST paid on the purchase price. This is how the HST rebate works for first-time homebuyers:

The new housing rebate totals 36% of the tax that all first-time homebuyers need to pay when buying a new home.


The rebate covers up to $6,300 on homes that have a fair market value of $350,000 or less.

The maximum rebate that first-time homebuyers can receive for the provincial portion of the HST is $24,000. This is the maximum HST rebate available for any home worth $400,000 or more.


TYPE OF PROPERTIES ELIGIBLE FOR THE HST REBATE



For first-time homebuyers to be eligible for the HST rebate, there are specific properties that qualify. Specifically, you must have purchased, built or significantly renovated a home. The types of housing that are eligible for the rebate include:


  • Home or condo purchased from a builder

  • Owner-built homes

  • Co-operative housing complexes

  • Mobile homes

  • Floating homes

HST REBATE RULES AND CONDITIONS


With being a first-time homebuyer, there are a few rules you need to be aware of related to the HST rebate. Martin Rumack, a Toronto Real Estate lawyer, wrote in a recent blog "the HST rebate may surprise (first-time) homebuyers - and may disqualify you from obtaining the rebate entirely. The HST rebate has been established under s. 254 Excise Tax Act. To qualify, purchasers must meet certain criteria pertaining to the nature of the home purchased, and also must meet eligibility requirements."


As a first-time homebuyer, you will need to meet all of the following rules and conditions:

You purchased a new or substantially renovated home or condo from a seller, and you paid all the HST/GST due on the purchase price.


  • Renovated or hired a company/individual to renovate your existing home and add a significant addition (Note: adding a porch, family room or bedroom doesn't qualify).

  • Converted a non-residential property into a home.

  • Rebuilt a home that was destroyed in a fire.

  • Upon signing the purchase and sales agreement, the house is intended to be your or family members' primary residence.

  • The purchase price of the house or condo (including the land, where applicable), including the purchase price before taxes, is less than $450,000.

  • Ownership of the home or condo identifies whoever purchased the property after construction or renovation is completed.

  • Your family members that qualify for the HST rebate are spouses, parents, grandparents, and siblings. Those family members that do not qualify are aunts, uncles, cousins, nieces, nephews, friends or business partners.

WHAT TO INCLUDE WITH YOUR HST REBATE APPLICATION?


When you're filing your HST rebate, it's important to include supporting documentation with your application. As a first-time homebuyer, you must submit any invoices with your HST Rebate worksheet where the vendor did not charge the HST/GST on the invoice (photocopies are acceptable). It's important to note that you may be contacted and asked to submit proof of occupancy.



The HST rebate worksheet requires first-time homebuyers to fill out the following information:


  • Part A: Identification of the claimant

  • Part B: Reason for the rebate request

  • Part C: Rebate claimed

  • Part D: Third party address

  • Part E: Certification

  • Part F: Details of the rebate application

  • Part G: Registered supplier identification or insurer

  • Part H: Direct deposit request

Then, there are also documents that you may not be required to submit but still need to keep on file:


  • A copy of the completed HST rebate application (keep all original invoices and supporting documents for up to 6 years).

  • Only original invoices with the name of the homeowner or co-owner(s) are accepted.

  • Photocopies aren't accepted, credit card or interact slips or account statements if the original invoices don't accompany them.

  • Estimates and quotes are also not accepted as proof as purchase.

So once your completed application and documentation are submitted and you have addressed any follow-up questions from the Canada Revenue Agency (CRA), the HST rebate is usually processed within 1-2 months after the application has been filed. In some cases, it can take up to 6 months to be processed and the rebate sent to you.


DON’T MISS OUT ON CLAIMING YOUR HST REBATE


Getting into the real estate market and buying your first home in Toronto is tough. The HST rebate, along with other incentives and credits offered to homebuyers, including first-timers, is a great opportunity to help achieve homeownership.


Check your eligibility for these credits or get an experienced, savvy real estate agent who can not only help you find your first home but also hold your hand while navigating the complex rules, regulations, and policies of the real estate industry.


If you are a first-time homebuyer and are interested in learning more about the HST rebate, reach out to one of our expert real estate agents at OnlyWith.ca


Each member of our team takes pride in knowing we've helped homebuyers and sellers make the right decision because we know and understand that finding your first home is an important milestone in your life.

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