Buying a new home? Don’t forget about the GST/HST New Housing Rebate

First-time home buyers in Toronto are mostly concerned about affordability. There is no lack of houses for sale, so obviously it is not a major worry. What is distressing are the rising home prices and the consumption tax, in other words the Harmonized Sales Tax. Buyers of real estate are required to pay the HST on the purchase and it is needless to say that this tax negatively affects property sales. The HST is charged on the purchase price, so people have no other option that to pay it. You do have to pay the federal part of the harmonized sales tax but you also have the opportunity of getting help. There is a program that allows people to get back a part of the money spent when acquiring their dream home. More precisely, there is something called first time home buyers rebate. You can claim a GST/HST New Housing rebate and you will be able to handle the expenses. Therefore, you will not have to use up all your money to purchase a new house.

Introduction to GST/HST New Housing Rebate

All real estate decisions should be made with a good understanding of financial circumstances. As mentioned before, purchases of houses or condominiums are subject to the HST, yet homebuyers have the possibility to claim reimbursement and obviously pay the harmonized sales tax. It is important to mention that the refund is available only to those who meet all the criteria for claiming the rebate. You can apply for a 36% reimbursement of the harmonized sales tax for a home whose market value does not exceed $350,000. New home buyers can also claim a refund of 75% of the Ontario share of the HST. As a general rule, the refund is granted to the builder of the new property, which means that you are not required to pay the full price at closing. What happens is that the builder claims the rebate on your behalf.

Are you eligible for the GST/HST rebate?

The Canada Revenue Agency has strict eligibility requirements. To qualify for a GST/HST New Housing Rebate, you must use the real estate as your primary place of residence, which means that you cannot own an interest in a primary residence anywhere else. You can apply for the refund only if you are planning to occupy the house after buying it. You are eligible for an exempt if the real estate has the specified market value and if you have lived in Canada for the last 12 months. For homes priced above $450,000 there is no reimbursement.

Pay attention to subterfuges

Although the process is pretty simple, you have to keep in mind that the New Housing Rebate is not always available. The explanation may more often than not lies in the eligibility requirements. If your claim is challenged by the CRA and you know for sure that you qualify, you should get in touch with experts in such matters to help you. The good news is that you may be able to claim a different refund, the drawback being that you are obliged to pay the HST at closing. The point is that the legislation is complicated, so you need to get all the help you can.