Does Fair Market Value or Purchase Price Decide the GST/HST New Housing Rebate in Canada?
This answer covers Canadian federal tax law, which applies in every province.
It depends on how you got the home. For a house bought from a builder, the $350,000 and $450,000 thresholds are tested against total consideration, which is the purchase price excluding GST/HST and certain other amounts. For owner-built homes, they are tested against fair market value, the highest price in an open and unrestricted market.
So if you bought from a builder, the test looks at total consideration rather than fair market value. How CRA treats an appraisal that differs from your contract price is worth raising with a lawyer or accountant. If you built or substantially renovated, fair market value on substantial completion is tested, and B in the formula is the greater of $350,000 and that value. Assignment fees count toward the price threshold only if taxable.
Special cases use different figures. For a house on leased land or a co-op share, the base test uses $472,500 and the first-time buyer test uses $1,575,000. Because the figure that counts changes with the type of purchase, confirm which route applies to you before relying on a number.
Key takeaways
- On a builder purchase, the $350,000 and $450,000 thresholds are tested against total consideration.
- On an owner-built home, the thresholds are tested against fair market value on substantial completion.
- Assignment fees count toward the price threshold only if taxable.
- Leased land and co-op shares use $472,500 for the base test and $1,575,000 for the first-time buyer test.