GST/HST New Housing Rebate in Ontario: A Tax Angle Guide for New Home Buyers

Buying a newly built home in Ontario comes with a tax surprise that catches many buyers off guard: the full HST applies to the purchase price. For a home in the mid-to-upper range, that tax bill can be substantial. What many buyers do not realize until they are sitting with a lawyer at closing is that a significant portion of that HST may be recoverable through the GST/HST New Housing Rebate.

The GST HST new housing rebate Ontario buyers can claim is made up of two separate streams — one federal, one provincial — and the rules around eligibility, timing, and how the rebate gets paid out depend on a handful of critical factors. Getting those details wrong can mean leaving money on the table, or worse, having to repay a rebate you were never entitled to.

This guide walks through how the rebate works, who qualifies, what different purchase scenarios mean for your claim, and why both an accountant and a real estate lawyer belong in your corner before closing day.

What the GST/HST New Housing Rebate Actually Is

The Two-Component Structure

The rebate is not a single government payment. It is two overlapping rebates that together offset a portion of the HST paid on a qualifying new home:

• The federal component is administered by the Canada Revenue Agency under the federal GST/HST rules. It applies to the federal portion of the HST (five percentage points of Ontario's combined rate).
• The Ontario provincial component is a parallel rebate that applies to the provincial portion of the HST (eight percentage points). Ontario chose to harmonize its sales tax with the federal GST, and as part of that arrangement, the province offers its own rebate stream.

Both components phase out as the purchase price rises above a threshold. As of writing, the rebate begins to decrease once a home's price passes a certain point and disappears entirely above a higher ceiling — verify the current thresholds with the CRA or a tax professional, because these figures are subject to change. Below the lower threshold, buyers can claim the full rebate on both components.

Who Qualifies

The fundamental requirement is that the home must be purchased or built as the buyer's primary place of residence — meaning the buyer, or a close relation, must intend to live in it as their main home after closing. A second property, a cottage, or a home purchased primarily as a rental investment does not qualify.

The rebate framework distinguishes between a few different buyer types:

• Buyers purchasing from a builder: The most common scenario. You buy a newly constructed home or condo from a developer.
• Self-builders (owner-built homes): You purchase land and contract a builder, or build the home yourself. A separate rebate stream applies.
• Substantial renovators: You gut an existing home to the point that it qualifies as "substantially renovated" under the tax rules.

New Builds from a Builder: The Closing Credit

When you buy a newly built home directly from a builder, the purchase price you agreed to may or may not include HST, depending on how your Agreement of Purchase and Sale is drafted. In many cases, the builder has already factored the rebate into the stated price — meaning they charge you HST on the full amount but simultaneously credit you the rebate at closing, effectively reducing your net cost.

To make this work, you must assign your right to the rebate over to the builder. The builder then applies for the rebate on your behalf. If you are not eligible — for example, because you misrepresented that you intended to live in the home — the CRA can and does come after the buyer to recover the rebate the builder already received.

If the builder does not credit the rebate at closing, you apply directly to the CRA after the transaction closes.

The Substantial Renovation Route

An existing home that has been extensively gutted and rebuilt can qualify as a new home for rebate purposes, but the bar is high. The tax rules generally require that approximately ninety percent of the interior of the existing structure be removed or replaced. Cosmetic upgrades — new kitchens, new bathrooms, fresh finishes — do not come close to meeting this threshold. The renovation must essentially reduce the home to its structural shell before rebuilding it from scratch.

If the renovation qualifies, the homeowner can claim the rebate on the HST paid for construction materials and services, subject to the same primary-residence requirement.

Owner-Built Homes: A Separate Stream

If you buy a vacant lot and build — whether by contracting a general contractor or managing the build yourself — you access the owner-built home rebate stream rather than the purchased-from-builder stream. The mechanics differ: you self-assess the HST on the fair market value of the completed home and then apply for the rebate against that amount. Because self-assessment is easy to get wrong, owner-builders almost always benefit from working with a tax professional before the build is completed.

Assignment Sales: A Complex Middle Ground

Pre-construction assignment sales — where the original buyer sells their Agreement of Purchase and Sale to a new buyer before the home is built — create rebate complications for both parties.

The original buyer (assignor) may have to collect and remit HST on the profit from the assignment itself. The new buyer (assignee) steps into the transaction but must independently satisfy all rebate eligibility requirements. If the assignee does not intend to use the home as their primary place of residence, they cannot claim the rebate — and they may be on the hook for the full HST without any offset.

Assignment sale rules have attracted increased CRA scrutiny in recent years. If you are buying or selling a pre-construction assignment, tax advice before signing is not optional.

The Two-Year Deadline

Whether you are a buyer applying directly or an owner-builder self-assessing, the rebate application must be filed within two years of the date the transaction closes (or the home is first occupied, in the case of owner-built homes). Missing this deadline forfeits the rebate entirely. Two years may sound generous, but it passes quickly when you are managing a move and setting up a household.

Common Mistakes That Void the Rebate

Rental Intent at Closing

This is the most frequent reason buyers lose their rebate. If you plan to rent the home — even temporarily, even just for the first few months — your intention at the time of closing is what the CRA looks at. Signing a lease before or immediately after closing is strong evidence of rental intent. The rebate is clawed back, and penalties can follow.

Assuming the Builder Applied

If your Agreement of Purchase and Sale does not clearly spell out who is responsible for the rebate application — and whether the builder has already credited it into the price — confirm this with your lawyer before closing. Do not assume.

Skipping Professional Help on Complex Deals

For standard purchases from established builders, the process is fairly routine. For assignment sales, substantial renovations, owner-built homes, or situations where the buyer does not intend to occupy the property personally, the rebate rules become layered quickly. Errors cost money.

Frequently asked questions