One of the most overlooked financial advantages for new home buyers in Ontario is the HST New Housing Rebate, and understanding it could save you thousands of dollars.
When you purchase a newly constructed home or condo directly from a builder, HST is embedded in the purchase price. However, the federal and provincial governments offer rebates that return a portion of that tax to qualifying buyers. The combined federal and Ontario rebate can amount to significant savings, particularly on homes priced under $450,000 federally, or under $400,000 for the Ontario portion.
Who qualifies?
To be eligible, the home must be your primary place of residence (or that of a close family member). Investment properties do not qualify for the rebate in the same way, though there is a separate rebate available for landlords renting out new builds, which is worth exploring with your accountant.
What about homes over the threshold?
For homes priced above the federal threshold, the federal portion of the rebate phases out, but the Ontario portion may still apply. Many buyers are surprised to learn that the Ontario rebate of up to $24,000 can still be claimed even when the federal rebate is not available.
Builder assignments and pre-construction contracts
If you are purchasing an assignment (buying someone else's pre-construction contract before closing), HST rebate eligibility becomes more complex. It is critical to review the original Agreement of Purchase and Sale carefully and work with a real estate lawyer experienced in new builds.
HST rebate rules have nuances that depend on your specific situation, the price, intended use, and type of property all matter. Before you close on a new build, speak with both your real estate lawyer and accountant to ensure you are claiming everything you are entitled to.
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