GST/HST Substantial Renovation Rebate in Canada: When It Applies

Maybe you bought a house that a builder gutted and rebuilt, or maybe you stripped your own home down to the studs and rebuilt the inside. Either way, you want to know whether the work counts as a substantial renovation and whether a GST/HST rebate is available.

This article explains the federal test in plain terms, how the rebate differs for a buyer and an owner-renovator, and what records to keep. Provincial top-ups vary, so they are outside this article.

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

What counts as a substantial renovation

Generally, 90% or more of the interior of an existing house is the minimum that must be removed or replaced, and only livable areas count toward that figure. A kitchen and bathroom update, new flooring or a fresh coat of paint is nowhere near that level.

If the work does meet the test, the home can qualify for the new housing rebate in the same way a newly built one does. Because the test depends on the facts of your project, a contractor's scope of work and photos can matter if CRA asks questions.

If you bought the renovated house from a builder

The rebate under section 254(2) applies where a builder sells a new single unit residential complex or condo unit to an individual who acquires it as their own or a relation's primary place of residence, total consideration is under $450,000, all applicable tax has been paid, and ownership transfers after substantial completion. A substantially renovated home can qualify like a new one.

If total consideration is $350,000 or less, the rebate is the lesser of $6,300 and 36% of the GST or federal part of HST paid. Between $350,000 and $450,000 it phases out, and at $450,000 or more it is nil. For a builder purchase, these thresholds are tested against total consideration, which is the purchase price excluding GST/HST and certain other amounts.

The first person to occupy the home must be the buyer or a relation, unless the buyer sells the home in an exempt sale before anyone occupies it.

If you renovated your own house

An individual who substantially renovates a house, or hires someone to do so, for their or a relation's primary residence may claim under section 256(2) if the fair market value on substantial completion is under $450,000. The rebate is A × ($450,000 − B) ÷ $100,000, where B is the greater of $350,000 and the fair market value, and A is the lesser of 36% of tax paid and $6,300.

For owner-built homes the thresholds are tested against fair market value, which is the highest price in an open and unrestricted market, rather than a contract price.

A first-time buyer top-up can also apply to owner-built homes. Construction or renovation must begin after March 19, 2025 and before 2031 and be substantially complete before 2036.

Deadlines, records and the key differences

For owner-built homes, the base date is the earliest of two years after first occupancy, the ownership transfer date, or substantial completion. For example, substantial completion on April 30, 2026 means a deadline of April 30, 2028. The deadline runs from that base date, not from the day you move in.

Only original invoices in the claimant's or co-owners' names are accepted, and you send invoices only where GST/HST was not charged. Keep originals and records for six years.

What to do next

• Write down what was removed or replaced, and estimate how much of the livable interior it represents.
• Collect contracts, original invoices and the statement of adjustments.
• Work out your deadline from the right date, and set a reminder well ahead of it.
• Confirm you or a relation will use the home as a primary residence, and that intent was clear from the start.
• If the project is close to the 90% line, ask a lawyer or accountant before you file.

Frequently asked questions