Do builder upgrades on a new condo attract HST in Ontario?

Yes, upgrades and extras purchased from a builder on a new condominium in Ontario are generally subject to HST. When you select upgrades — such as flooring, cabinetry, countertops, or appliances — through the builder's decor or upgrade process, those amounts are part of the supply of the new home and attract HST at 13%.

Whether HST is included in or added on top of the upgrade price depends on how the builder's upgrade agreement is structured. Some builders quote upgrade prices inclusive of HST, while others quote exclusive of HST and add the tax on top. Read the upgrade contract carefully.

Upgrades increase the total purchase price for HST purposes. If you qualify for the new housing HST rebate, the rebate is calculated on the total price including upgrades. For buyers of higher-priced homes where the full rebate is no longer available, the HST on upgrades represents a real additional cost. Your lawyer will review the purchase agreement and upgrade schedule to ensure all HST amounts are correctly documented. This is especially important because the HST treatment needs to be clear before you can determine whether the builder has priced the home HST-inclusive or exclusive of the rebate.