- Most resale home purchases don’t need an HST clause at all, because the sale of used residential property is generally exempt from HST under federal tax law.
- A purchase agreement that simply states a price without addressing HST at all creates avoidable risk for both sides.
- A well-drafted clause typically addresses: 1.
Four words can change how much you actually pay for a home: "HST included" versus "plus applicable HST." On most resale purchases in Ontario, the question barely comes up, because the sale of a used home is generally exempt from HST. But the moment you’re buying new construction, a substantially renovated home, or land that isn’t a simple resale of an existing house, HST becomes a real line item — and your Agreement of Purchase and Sale (APS) needs to say, in plain terms, whether it’s already baked into the price or added on top.
This matters because HST on a new home is not a rounding error. Getting the wording wrong, or leaving it silent, can turn a budgeted purchase into a much more expensive one.
Why This Clause Exists
Most resale home purchases don’t need an HST clause at all, because the sale of used residential property is generally exempt from HST under federal tax law. Where HST does apply — new builds, substantially renovated homes, and certain other transactions — the APS should say explicitly whether the stated purchase price is:
- Inclusive of HST — the number on the page is the total you pay, tax and all; or
- Exclusive of HST ("plus applicable HST") — HST is calculated on top of the stated price and added to what you owe on closing.
Builders’ standard-form agreements for new construction almost always address this directly, often alongside a clause dealing with the buyer assigning their eligibility for the GST/HST New Housing Rebate back to the builder. Resale agreements between private individuals for an exempt sale typically don’t need the clause at all — but if there’s any chance the sale could be treated as taxable (a substantially renovated flip, for example), it should be addressed rather than assumed.
What Happens If the Agreement Is Silent
A purchase agreement that simply states a price without addressing HST at all creates avoidable risk for both sides. If the transaction turns out to be a taxable supply and the agreement never mentions HST, a dispute over whether the price was meant to include it — or whether the buyer owes it on top — is exactly the kind of ambiguity that ends up in a lawyer’s inbox close to closing, when there’s no time to negotiate calmly.
Rather than relying on assumptions about how a silent contract would be interpreted, the safer and standard practice is to make the tax treatment explicit in the agreement itself, before anyone signs.
What a Clear HST Clause Should Cover
A well-drafted clause typically addresses:
- Whether the stated price includes HST — a direct statement, not an inference.
- Whether the buyer is assigning the New Housing Rebate to the seller/builder as part of the price calculation, or claiming it independently.
- What happens if the buyer’s eligibility for a rebate turns out to be different than assumed — for example, if the home won’t be used as the buyer’s or a relation’s primary residence.
- Who bears the tax if the transaction’s taxable status changes between the agreement date and closing (relevant on substantially renovated or converted properties).
New Construction vs. Resale: Different Defaults
| Typical resale home | New construction / substantial renovation | |
|---|---|---|
| General HST treatment | Usually exempt (used residential property) | Usually taxable |
| Does the APS need an HST clause? | Often not, unless taxable status is uncertain | Yes — standard practice |
| Rebate considerations | Not usually applicable | Often addressed directly in the agreement |
| Risk of silence | Low, if genuinely a simple used-home resale | Higher — ambiguity can mean thousands in dispute |
A Note on Rebates and Current Figures
Where a new home purchase does qualify for HST relief, the rules around exactly how much and under which program are unusually layered right now: there’s a long-standing federal/provincial New Housing Rebate structure, plus newer and proposed programs that overlap it in different ways depending on when the agreement was signed and when construction completes. Because these figures and eligibility rules are genuinely in flux as of mid-2026, this article won’t state specific caps or percentages — verify the current numbers with your lawyer or accountant before you rely on any figure you’ve seen elsewhere, including in a builder’s marketing materials.
Frequently asked questions
My builder’s agreement says the price is "net of HST" — what does that mean?
It generally means the stated price already accounts for the expected rebate being assigned to the builder, so what you see is close to what you’ll pay. But "net of HST" language varies by builder, and the details of exactly how the rebate assignment and any adjustment for ineligibility are handled should be reviewed by your own lawyer before you sign.
Can the builder charge me more HST later if my rebate assignment falls through?
Many builder agreements include a clause allowing the builder to collect the rebate amount directly from the buyer if the buyer turns out not to qualify (for example, because the home won’t be used as their primary residence). This is exactly the kind of clause a lawyer should flag for you before you sign, not after.
Do I need to worry about this on a resale condo or house?
Generally no — most resale sales of used homes are HST-exempt. The concern arises mainly with new construction, assignment sales of pre-construction units, substantially renovated properties, and certain investment or flip transactions where the taxable status isn’t a given.
Is HST the same as land transfer tax?
No, they’re separate. Land transfer tax is an Ontario tax paid on the transfer of the property itself, calculated on the value of the consideration. HST, where it applies, is a federal/provincial sales tax on the supply of the property as goods or services. A transaction can involve one, the other, or both.
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