Is HST payable on a new home purchase in Ontario and is there a rebate?
HST applies to new home construction and newly built homes in Ontario but not to re-sales of existing residential properties. When you buy a brand-new home from a builder, HST is typically included in the purchase price — but the way it is presented in the agreement of purchase and sale can vary, so always confirm whether the price is HST-inclusive or HST-plus.
There are two rebates that can offset the HST cost. The federal GST New Housing Rebate applies to the federal portion of HST (five percent) and is available for homes up to a certain price threshold; the rebate phases out for higher-priced homes. Ontario also offers a provincial new housing rebate on the Ontario portion of HST. Together, these rebates can represent a significant saving.
Builders often assign the rebates to themselves as part of the purchase agreement — in effect building the net HST cost into the price after anticipated rebates. If you are buying a new home as an investment (not as your primary residence), you may not qualify for the rebates and could owe the full HST. Misrepresenting your intended use has serious consequences. Your lawyer reviews the HST provisions in your agreement and advises on your rebate eligibility before closing.
Key takeaways
- HST applies to new builds, not to resale homes.
- Federal and provincial HST new housing rebates are available, subject to price thresholds.
- Builders often assign rebates to themselves — confirm the net price in your agreement.
- Investment buyers who won't occupy the home may not qualify for rebates.