What is the HST new housing rebate in Ontario and how does it work?
When you purchase a newly built home in Ontario, HST (13%) applies to the purchase price. This can add a significant amount to the cost of a new home. To ease this burden, both the federal government and Ontario provide rebates that reduce the effective HST payable — these are combined into what is commonly called the Ontario New Housing Rebate.
The federal component of the rebate applies to new homes up to a certain fair market value threshold and rebates a portion of the 5% federal GST component. The Ontario provincial rebate (the Ontario new housing rebate) provides a rebate of 75% of the provincial portion (8% of 13% HST), up to a maximum amount, regardless of the home's purchase price — so even high-value homes qualify for the Ontario portion.
In most builder transactions, the builder credits the rebate to the buyer at closing (you assign your rebate to the builder and receive a lower purchase price). If you are building your own home (owner-built), you apply for the rebate directly from the CRA after completion. Timing and documentation requirements are strict. If you buy a home intending to use it as a rental, different rebate rules apply.
Key takeaways
- New homes in Ontario are subject to 13% HST, but federal and provincial rebates partially offset this.
- The Ontario provincial rebate is 75% of the 8% provincial component, up to a cap.
- Builders typically credit the rebate at closing; owner-builders apply directly to the CRA.
- Different rebate rules apply to new homes purchased as rental properties.