The New Home HST Rebate in Ontario: Who Qualifies

If you are buying a newly built home or a pre-construction condo in Ontario, HST is part of the equation — and so, potentially, is a rebate. The HST rebate for new homes in Ontario is one of the more consequential pieces of the closing cost puzzle, but it is also one that many buyers do not fully understand until it is almost too late to plan around it.

This article explains how HST applies to new residential construction, which rebate applies in which situation, and what you need to do to claim it. Because the rebate thresholds, rates, and eligibility conditions are set by legislation and CRA administrative policy — both of which can change — always verify the current amounts and rules with your real estate lawyer or a tax accountant before closing.

Why HST Applies to New Construction

When you buy a resale home from an individual seller, no HST applies to the purchase price. HST is a tax on new supplies — and a new home being sold for the first time from a builder counts as a taxable supply under the federal Excise Tax Act and Ontario's value-added tax rules.

This means every new home — whether a detached house, a townhome, or a pre-construction condo — is subject to HST. The combined HST rate in Ontario is 13% (comprising the federal GST portion and Ontario's provincial component), applied to the purchase price. On a home priced at several hundred thousand dollars, this is a meaningful amount.

The New Housing Rebate: For Buyers Who Will Live There

The federal government and Ontario both provide partial rebates of the HST paid on a new home, subject to price and use conditions. These rebates are commonly referred to together as the New Housing Rebate or the New Home HST Rebate.

Who Qualifies for the New Housing Rebate?

To qualify for the owner-occupied new housing rebate, the general requirements are:

• The purchaser (or a qualifying relation) intends to use the property as their primary place of residence
• The purchase is of a newly constructed or substantially renovated residential complex
• The purchase price is within the eligible range for the rebate to apply (above certain price thresholds, the rebate phases out and eventually disappears entirely — verify the current thresholds with CRA or your lawyer, as these are set by legislation)

"Qualifying relation" means certain family members — so a parent buying for a child to use as a primary residence, for example, may still qualify, subject to conditions.

How Is the Rebate Typically Applied?

In most new home purchases, the builder applies the rebate on the buyer's behalf: they collect HST and apply the expected rebate credit at closing, so the buyer pays a net amount that is reduced from the full HST. The buyer assigns their right to the rebate to the builder in exchange for this price reduction.

This arrangement only works if the buyer actually qualifies. If the builder applied the rebate and the buyer turns out not to qualify (for example, because they actually intended to rent the property out), the buyer may owe CRA the rebate amount that was credited. This is a real risk in investment purchase scenarios, and CRA does audit it.

What If the Builder Did Not Apply the Rebate?

If the builder did not apply the rebate at closing (some builders, particularly for lower-priced units or certain agreement structures, do not), you may need to apply for the rebate directly from CRA after closing. There are deadlines for self-filing. Do not assume the rebate was handled — confirm with your lawyer before closing.

The New Residential Rental Property Rebate: For Investors

If you are purchasing a new home that you intend to rent out rather than occupy yourself, the owner-occupied New Housing Rebate does not apply to you. However, a different rebate may: the New Residential Rental Property (NRRP) Rebate.

How the NRRP Rebate Works

The NRRP Rebate is available to individuals who purchase a new residential unit and lease it to a tenant as their primary place of residence. The conditions are different from the owner-occupied rebate:

• You (the purchaser) do not need to live there — you need a qualifying tenant to do so
• The first use of the unit must be as a long-term residential rental
• The unit must be the primary place of residence of the first tenant
• Application is made directly to CRA after closing (unlike the owner-occupied rebate, which is usually handled at closing through the builder)

The NRRP Rebate is important for investors in pre-construction condos. If you buy an investment unit and allow it to sit empty, or rent it short-term (for example, on Airbnb) before establishing a qualifying long-term tenancy, you risk losing the rebate entirely and owing the full HST.

Deadlines Matter

The NRRP Rebate has an application deadline after the unit is occupied. Missing this deadline means losing the rebate. If you are purchasing as an investor, confirm the application timeline with your lawyer well before closing.

Substantially Renovated Homes

The new housing rebate framework also applies in certain circumstances to substantially renovated homes — where a building has been so extensively gutted and rebuilt that it is treated as a new supply for HST purposes. This applies to renovations that meet specific thresholds under the Excise Tax Act. If you are buying a property that has been substantially renovated, confirm whether HST applies to the transaction and whether a rebate is available.

Pre-Construction Condos: Timing and Intent

For pre-construction condo purchases, two factors deserve extra attention:

1. Intent at time of purchase matters. CRA looks at the buyer's intended use when the agreement was signed, not just what they ultimately do with the unit. Buying as "owner-occupied" but then renting it out can trigger repayment of the rebate if CRA determines the stated intent was not genuine.

2. The purchase price at the time of the original agreement may differ from closing. If you assigned the agreement before closing (see our article on assignment sales), the person completing the purchase — the assignee — is the one whose qualifying status and intent determines rebate eligibility, not the original purchaser.

Common Mistakes to Avoid

• Assuming the rebate has been applied: Confirm with your lawyer before closing that the builder's statement of adjustments reflects the rebate correctly.
• Buying as owner-occupied when you plan to rent: The rebate conditions require genuine primary residence intent. CRA audits this, particularly for investor-heavy condo buildings.
• Missing the NRRP Rebate application deadline: The application must be filed within a set period after the first tenant takes occupancy. Ask your lawyer about the timeline.
• Relying on outdated thresholds: The price thresholds above which the rebate phases out are set by legislation and have not changed frequently, but always verify the current amount. Do not rely on a blog post or casual advice — confirm with CRA or a professional.

Frequently asked questions