Is GST/HST Included in a New Home Price From a Builder in Canada?

You have a builder's agreement in front of you and a price on the first page. The question is whether that figure already includes GST/HST or whether tax is added on top.

The contract wording answers that question, not a general rule. This article explains how the tax connects to the price for rebate purposes and what to look for on your statement of adjustments.

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

Price and tax are tracked separately

For rebate purposes, the price and the tax are treated as two different amounts. For a house bought from a builder, the price thresholds are tested against total consideration, which is the purchase price excluding GST/HST and certain other amounts. CRA's worksheet follows the same idea: one line is the GST or federal HST paid on the house, and another is the purchase price paid to the builder excluding tax.

Whether the number on the first page of your contract already has tax folded in is a matter of how the agreement is written. Some agreements state a price plus applicable taxes, and others state a price that includes them. Read the wording carefully and ask the builder to confirm in writing.

Why it matters for the rebate

The new housing rebate is a percentage of the tax paid, not of the price. CRA's guide says to multiply the GST or federal HST paid by 36%, capped at $6,300 at 5% GST or 13%, 14% or 15% HST.

The price you use to test eligibility is also the price excluding tax. The rebate applies where total consideration is under $450,000, and it is the lesser of $6,300 and 36% of the tax paid where total consideration is $350,000 or less. Between $350,000 and $450,000 it phases out, and at $450,000 or more the base rebate is nil. If the contract price includes tax, you may need to separate the tax from the price to know which side of those lines you fall on.

What to look for on the statement of adjustments

The statement of adjustments is the closing document that shows the money moving between you and the builder. When you claim the rebate yourself, you send a copy of it with Form GST190.

• The purchase price, and whether it is shown before or after tax.
• The GST or federal HST charged, shown as its own line.
• Any rebate credited by the builder against the price, which the builder may do instead of paying you.
• Any assignment amounts, since you may pay GST/HST to the original builder and to the assignor, and assignment fees count toward the price threshold only if taxable.

If the builder credits the rebate on closing, you do not send the application, and the builder files it with its return. An assignor who sold you the purchase agreement cannot pay or credit the rebate, so an assignee must claim directly from CRA on Form GST190.

What to do next

• Ask the builder in writing whether the price includes GST/HST or whether tax is added.
• Ask whether the builder will credit the new housing rebate on closing, or whether you must apply yourself.
• Review the draft statement of adjustments for the tax line and any rebate credit before closing.
• Keep your agreement, statement of adjustments and records. CRA's guide says to keep supporting records for six years.
• If you must apply, remember the deadline is generally two years after ownership transfers.

If a clause is unclear, a real estate lawyer or accountant can read it with you before you sign. A missed deadline on a builder purchase generally means the rebate is lost.

Frequently asked questions