Do I pay HST on a new construction home purchase in Ontario?

Yes, HST applies to the purchase of newly built homes in Ontario. Unlike resale homes, which are exempt from HST, new construction is a taxable supply for HST purposes. The full purchase price of a brand-new home — whether a house, condo, or townhouse — is subject to HST at 13%.

However, the federal and Ontario governments offer HST rebates to buyers of new homes used as a primary residence. The combined federal and Ontario new residential rental property rebate or new housing rebate can recover a significant portion of the HST paid, particularly on homes priced within qualifying thresholds. For homes above certain price points, the rebate phases out or disappears entirely, so the net HST cost increases with purchase price.

Builders typically factor the HST (net of the rebate, assuming you qualify) into their quoted prices. If you are buying as an investor or will rent the property rather than occupy it yourself, different rebate rules apply. Your agreement of purchase and sale should specify whether the purchase price is inclusive or exclusive of HST. Review this carefully with your lawyer before signing — the distinction can be worth a very large amount of money.