- When you purchase a used residential property — a house, condo, or townhome that has been previously occupied as someone's primary residence — the sale is generally exempt from HST.
- Purchases of newly built homes, condominiums, and purpose-built rental units are subject to HST.
- Commercial property transactions — office buildings, retail units, industrial land, and mixed-use buildings — are generally taxable for HST purposes, not exempt.
Buying or selling property in Ontario raises an immediate question: does HST apply? The answer depends almost entirely on what type of property is changing hands. For most people purchasing a resale home, HST is not a concern. For buyers of new construction, vacant land, or commercial real estate — or for anyone involved in an assignment — the rules are more complicated and the tax exposure can be significant.
This article walks through the core rules around HST on real estate in Ontario as they are generally understood. Because tax law changes frequently and the details of your transaction matter enormously, treat everything here as a starting point. Before closing any deal, confirm the current rules with CRA or a qualified tax professional.
The General Rule: Resale Homes Are Exempt
When you purchase a used residential property — a house, condo, or townhome that has been previously occupied as someone's primary residence — the sale is generally exempt from HST. This is one of the most important distinctions in Canadian real estate tax law.
The exemption exists because the government's policy is to avoid taxing the same dwelling twice. HST was collected (or the builder credited it) when the property was first sold as new construction. Once a home enters the resale market, subsequent sales are treated as exempt supplies under the Excise Tax Act.
What counts as "used residential"?
A property is generally considered a used residential complex if it was previously occupied by an individual as a place of residence. The key word is "occupied." A unit that was built but never lived in — even if it sat on the market for years — is still treated as new construction for HST purposes. Buyers and sellers sometimes misunderstand this, and it can result in an unexpected tax bill.
New Construction: HST Is Included (Often Hidden in the Price)
Purchases of newly built homes, condominiums, and purpose-built rental units are subject to HST. As of writing, the combined federal-provincial HST rate in Ontario is 13 percent. This applies to the full purchase price of the new home.
In practice, many builders advertise prices that already include HST (net of any rebate they are assigning to themselves). Others advertise a pre-HST price and add tax on top. Buyers should always confirm whether the stated price is HST-inclusive before signing an agreement of purchase and sale. This is a question worth raising with your lawyer and with the builder before you commit.
The New Housing Rebate
To soften the tax burden on new home buyers, the federal and Ontario governments offer a New Housing Rebate. The rebate is calculated as a percentage of the HST paid and is subject to eligibility conditions and purchase price thresholds that CRA sets and updates.
The rebate generally applies when the property is purchased as the primary place of residence — either by the buyer or a qualifying relation. It does not apply to investment purchases where the buyer intends to rent the unit out immediately, though a separate New Residential Rental Property Rebate exists for that situation.
Because the rebate thresholds, percentages, and eligibility conditions can change, it is important to check CRA's current published figures at the time of your purchase. Your builder or real estate lawyer can walk you through how the rebate will be handled at closing.
Commercial Real Estate
Commercial property transactions — office buildings, retail units, industrial land, and mixed-use buildings — are generally taxable for HST purposes, not exempt. Unlike residential resale, the previous use of a commercial property does not create an exemption. HST is typically collectible by the vendor on the sale price.
The Election to Avoid Cash-Flow Issues
When both parties are HST registrants (typically two businesses), the buyer and seller can jointly elect under the Excise Tax Act to have the sale treated as having no HST payable. This election is common in commercial transactions and avoids the situation where the buyer must pay a large HST amount out of pocket and then wait to reclaim it as an input tax credit. Your lawyer and accountant should confirm whether a joint election is appropriate for your deal before closing.
Self-Assessment for Non-Registrants
If a commercial property is purchased by a buyer who is not an HST registrant, or if no joint election is made, the buyer may be required to self-assess the HST directly to CRA rather than paying it to the vendor. Missing this obligation can attract interest and penalties, so professional advice is important here.
Assignment Sales
Assignment sales — where the original purchaser of a pre-construction unit sells their interest in the Agreement of Purchase and Sale before closing — have specific HST rules that were tightened in recent years.
As of writing, HST generally applies to the profit on assignment sales of new residential properties in Ontario when the assignor is considered to be acting in the course of a business or an adventure in the nature of trade. Even individuals who are not in the business of trading real estate may find that CRA treats a particular assignment as taxable. The rules here are nuanced and fact-dependent.
If you are considering an assignment sale, speak with a tax lawyer or accountant before you proceed. The HST implications can significantly affect the net proceeds of the transaction.
Vacant Land
Vacant land is another area where HST surprises buyers and sellers. The sale of vacant land is generally taxable unless a specific exemption applies. The most commonly relied-upon exemption covers the sale of personal-use land — for example, a portion of a seller's own residential property being severed for a family member.
Sales of land that is zoned or used for commercial purposes, or land being sold by a business, are typically taxable. The intention for future use also matters: land sold with the expectation that a new home will be built on it may be treated differently from land sold as a pure investment. Because these rules are highly fact-specific, do not assume a vacant lot is HST-exempt without getting a professional opinion first.
Frequently asked questions
Is there HST on a resale condo in Ontario?
Generally, no. If the condo has been previously occupied as a primary residence, the resale is exempt from HST. The buyer and seller should confirm this with their respective lawyers, particularly if the unit was a former rental or was purchased directly from a builder but never occupied.
Does the new housing rebate apply if I plan to rent out the unit?
The standard New Housing Rebate applies only when the property is purchased as a primary place of residence. If you intend to rent the unit immediately, you would not qualify for that rebate. However, there is a separate New Residential Rental Property Rebate that may apply to landlords of new residential units. Confirm eligibility with CRA or a tax professional, as conditions and thresholds apply.
Do I pay HST on a commercial building I am buying for my business?
Generally yes, though your lawyer and accountant may be able to structure the transaction using a joint election to avoid having HST change hands at closing — particularly if your business is already registered for HST. Getting this structure right before closing is important.
What happens if HST was not collected but should have been?
CRA can assess HST, interest, and penalties against the vendor, the purchaser, or both, depending on the circumstances. In some situations, the purchaser is required to self-assess and remit directly to CRA. If you realize after closing that HST may have been missed, speak with a tax lawyer promptly.
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