GST/HST New Housing Rebate Denied

GST/HST New Housing Rebate Denied

New Housing Rebate

Under the new housing rebate, you are entitled to receive the rebate on the condition you will occupy the new home as the principal resident (meaning, you’re living in the new home day-in-and-day-out) for at least the first year.

The new housing rebate, pursuant to subsection 254(2) of the Excise Tax Act (Canada) (the “ETA“), allows for the partial recovery of GST or the federal portion of HST paid for a new or substantially renovated Home that is intended to be used by the buyer (or a relation) as his or her primary place of residence (the “Federal Rebate“).

There are several conditions that must be met to be eligible for the Federal Rebate. The same conditions apply to be eligible for a separate rebate available in Ontario, pursuant to section 41 of the New Harmonized Value-added Tax System Regulation, No. 2 for the provincial potion of HST paid in Ontario (the “Ontario Rebate“).

GST/HST Rebates on New Homes with More Than One Buyer

If you purchase newly constructed real estate in Ontario and want to qualify for the HST rebate new home program, you must use the property as the primary place of residence for yourself or someone closely related to you such as a child, grandchild, brother, sister, or someone you are related to by marriage or common-law partnership.

If anyone is listed on the title (even just for mortgage qualification reasons) that does live on the premises and is not “closely related”, no rebate will be issued.

If you did receive an GST/HST new housing rebate even though one or more of the individuals listed on the title will not be living at the residence and are not closely related, it is advised that you contact the CRA immediately. When the CRA eventually flags the transaction, you will be charged interest on the total amount of the refund.

To qualify for financing, a buyer may consider accepting a gift or loan, or the generous extended family member or friend may offer to be a secured guarantor instead of co-signing the agreement of purchase and sale.