What Counts as Primary Place of Residence for the Rebate in Canada

Many buyers of a new home ask whether they have to live in it themselves to get the federal GST/HST new housing rebate. Others are buying for a parent or an adult child and wonder whether that still counts.

This article explains how the primary place of residence test generally works, who counts as a relation, and what timing questions come up. Your own facts matter, so a lawyer or accountant can confirm how the rules apply to you.

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

The basic residence requirement

For a house bought from a builder, the buyer must acquire it as their own or a relation's primary place of residence. The rebate is also limited to homes where total consideration is under $450,000.

The intent to use the house as a primary place of residence must be evident at the outset of buying, building or substantially renovating. That is why the test looks at your plan when you buy, not only at what happens later.

The amount depends on the price and on the tax you paid. 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 using the formula A × [($450,000 − B) ÷ $100,000], where A is the lesser of $6,300 and 36% of the tax paid and B is the total consideration.

Buying for a parent, child or other relation

You do not have to move in yourself. The house may be the primary place of residence of the buyer or a relation, so a parent may qualify when buying for an adult child or other relation who will live there, if all other conditions are met.

The first occupant matters. The first individual to occupy the new home as a residence must be the buyer or a relation, or the buyer must make an exempt sale of the home before anyone occupies it.

Only individuals can claim the rebate. Partnerships and corporations cannot, and an individual cannot claim if a partnership or corporation co-owns the house. If more than one individual owns the house, only one can claim; the others are listed as co-owners on Form GST190, and the claim can proceed if at least one of the individuals meets the other conditions.

Who counts as a relation

• Blood relatives such as parents, children, descendants and siblings.
• Spouses and common-law partners.
• Adoptive relations.
• For this rebate only, former spouses and former common-law partners.

Whether someone outside this list, such as a friend or tenant, could be the first occupant depends on your facts, so it is worth confirming with a lawyer or accountant before you buy.

Homes that do not qualify, and timing

A recreational cottage, an investment property, or a house you plan to use on a more distant occasion such as retirement does not qualify.

The statute does not set a number of days within which you must move in. Because intent is judged at the outset, keep records showing your plan, such as the date you or your relation took possession and began living there.

Different rules apply if you build or substantially renovate a home yourself. An individual who constructs or substantially renovates a home for their or a relation's primary residence may claim if fair market value on substantial completion is under $450,000. Substantial renovation generally means 90% or more of the interior of an existing house is removed or replaced, counting only livable areas.

A home priced at $450,000 or more gets no base rebate. A separate first-time home buyer rebate may apply if the buyer qualifies, and it can be claimed in addition to the regular rebate as a top-up. A buyer who fails the first-time buyer test may still qualify for the regular rebate.

What to do next

• Confirm that the buyer is an individual, since partnerships and corporations cannot claim.
• Write down who will be the first occupant and how they are related to the buyer.
• Check the price against the $450,000 limit and the phase-out.
• Note the two-year deadline after ownership transfers for a builder purchase.
• Ask a lawyer or accountant before closing if the occupant is not clearly a relation.

If the builder pays or credits the rebate, you do not send an application, because the builder files it with its return. Otherwise you generally have up to two years from the date ownership was transferred to claim it on Form GST190. For a builder purchase, a missed two-year deadline generally means the rebate is lost.

With the form for a builder purchase you send a copy of the statement of adjustments, and you keep supporting records for six years. An individual who receives a rebate they were not entitled to must repay it. That is one more reason to confirm the occupant and your intent before you close.

Frequently asked questions