Will the Builder Credit the GST/HST Rebate on Closing in Canada?

You are closing on a new home and see GST or HST in the statement of adjustments. You have heard there is a rebate, and you would rather have it reduce what you pay on closing than wait for a cheque from the Canada Revenue Agency (CRA).

This article explains how builder crediting works for the federal GST/HST new housing rebate, who cannot use it, what paperwork is involved, and what happens if the builder says no. It is general information, not advice on your own purchase.

This article covers Canadian federal tax law, which applies in every province.

How crediting on closing works

When you buy a new house from a builder, you can apply for the rebate to the builder within two years after ownership transfers, and the builder may pay or credit the rebate if it agrees.

If the builder pays the rebate to you or credits it against the price, you do not send the application to the CRA yourself; the builder files it with its return. The builder can only do this if it agrees, and your window to apply to the builder is the same two years after ownership transfers. Whether your builder offers it, and how it shows up in the adjustments, depends on your agreement and the builder, so ask early.

Crediting is a convenience, not a right. The rebate itself still depends on the usual conditions, including that the price is under $450,000, you have paid the applicable tax, and the home is for your or a relation's primary place of residence.

When the builder cannot credit it

• You bought by assignment. Only the builder who sells the house can pay or credit the rebate; an assignor who sold you the purchase agreement cannot, so an assignee must claim directly from the CRA on Form GST190.
• You are not an individual. Only individuals can claim, and an individual cannot claim if a partnership or corporation co-owns the house.
• The builder simply declines. The builder has to agree to pay or credit, so you may need to claim on your own.

With an assignment there can be two builders, and you may pay GST/HST to the original builder and to the assignor for the interest transferred. That is one more reason to have the paperwork reviewed before closing.

The paperwork if you claim directly

If the builder does not pay or credit the rebate, you generally have up to two years from the date ownership was transferred to claim it on Form GST190. For houses on leased land the two years run from the date possession was transferred.

For a builder purchase, the form walks you through a few lines. Line 1 is the GST or federal part of HST paid on the house, line 2 is the purchase price paid to the builder excluding tax, line 3 is 36% of line 1 up to the maximum, and line 4 is the final amount carried to line C of the form.

Missed deadlines and overpaid rebates

The CRA says it will consider a late-filed rebate request only for owner-built homes in extraordinary circumstances, and that does not apply to a house bought from a builder. A missed two-year deadline on a builder purchase therefore generally means the rebate is lost.

Crediting does not remove your responsibility for eligibility. If a builder pays or credits a rebate it knew or ought to have known you were not entitled to, the builder and you are jointly and severally liable to repay it, and an individual who receives a rebate they were not entitled to must repay it.

What to do next

• Ask the builder, in writing, whether it will pay or credit the rebate and what form it needs from you.
• Check whether your agreement was assigned to you; if so, plan to claim directly.
• Confirm the price, the tax charged and your primary residence intention against the statement of adjustments.
• Note the date ownership transfers and set a reminder well before the two-year mark.
• Keep copies of everything for six years.
• If there is a co-owner that is a corporation or partnership, or the facts are unusual, speak with a lawyer or accountant before closing.

Frequently asked questions