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HST on the PurchasingPrice
HST ON THE PURCHASE PRICE
As of July 2010, HST applies on all new construction sales. The HST charged on the purchase price consists of 5% federal tax and 8% provincial tax. In order to help homeowners deal with this additional cost, the Government introduced a rebate program to reimburse buyers for aportion of the new tax imposed.
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Purchased to Live In
When you purchase a new home or condo from abuilder for yourself to live in or an immediate family member to live in, the Ontario HST rebate is assigned to the Builder on closing who in turn lowers the purchase price by the rebate amount. This means you do not have to pay HST on the purchase price! It is important to remember that the property must be occupied as a primary place of residence by the purchaser or their immediate family which means people related by blood, marriage, common-law partnership or adoption. Friends, business associates, uncles, aunts, nephews, nieces and cousins are all excluded from eligibility.
Purchased as an Investment to Rent Out to a Third Party
When you purchase a new home or condo from abuilder to rent out, the Ontario HST amount will be added to the purchase and must be paid in full on the final Closing date. Having said that; you can apply for arebate directly from the Government as long as you have entered into alease agreement with a minimum term of 1year.
The difference between the home being a primary residence or an investment property impacts the rebate. When it is a primary residence the purchaser obtains the rebate automatically from the Builder. When it is an investment property, the purchaser has to pay the HST rebate up front and then apply for the rebate from CRA.
About the New Housing Rebate
The new housing rebate basically gives you back 75% of the Provincial portion (8%), up to a new home purchase price of $400,000 which equals to a maximum rebate of $24,000. ($400,000 x 0.08% x 0.75%).It is also possible to obtain a federal rebate of up to $6000.
The rebate only applies to the first $400,000 which means the largest possible provincial rebate is $24,000 and the largest possible federal rebate is $6,000 even for amillion dollar home.
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