Primary Place of Residence Rule for the GST/HST New Housing Rebate in Canada

If you are buying a new home from a builder, you may be able to get back part of the federal GST or the federal part of the HST. One of the main conditions is about how the home will be used. Many buyers ask what "primary place of residence" really means, and whether it matters if someone other than you moves in.

This article explains the rule in plain terms, how family members fit in, and the situations that commonly cause problems. It is general information, not advice on your own purchase.

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

What the rule asks for

The federal new housing rebate applies when a builder sells a new single unit residential complex or a residential condominium unit to an individual who acquires it as their own or a relation's primary place of residence. The other conditions include that total consideration is under $450,000, that the individual has paid all applicable tax, and that ownership transfers after substantial completion.

The intent to use the house as your or a relation's primary place of residence must be evident at the outset of buying, building or substantially renovating. In practice, that means your purpose when you sign matters, not just what happens later.

Homes that do not fit

• A recreational cottage does not qualify.
• An investment property does not qualify.
• A house you plan to use on a more distant occasion, such as retirement, does not qualify.
• An investor who will not live in the unit cannot claim the owner rebate.

If you are buying to rent the unit out, a different rebate may exist. A corporation or other purchaser who is a landlord may be able to claim the new residential rental property rebate instead, if the purchase was taxable and it is not the builder. That rebate has its own rules and is not paid where the individual qualifies for the new housing rebate on the same housing.

Can a family member live there instead?

Yes, in many cases. 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.

A relation includes blood relatives (parents, children, descendants and siblings), spouses, common-law partners and adoptive relations. For the new housing rebate only, former spouses and former common-law partners also count.

Who must move in first, and when

The first individual to occupy the new home as a residence must be the buyer or a relation of the buyer, or the buyer must make an exempt sale of the home before anyone occupies it. If someone unrelated moves in first, the rebate may be at risk.

The statute does not set a number of days within which you must move in. For owner-built homes, CRA's example uses substantial completion as the base date for the filing deadline, even though the owner moved in later. Because the intent test is judged at the outset, keep records that show your plan.

Other conditions still apply. Only individuals can claim, 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, and the rebate can apply if all other conditions are met by at least one of them.

What to do next

• Write down who will live in the home and when, before you close.
• Confirm how each relation is related to you, using the relation categories above.
• Check that every owner on title is an individual, not a corporation or partnership.
• Keep the purchase agreement and statement of adjustments with your records.
• If you may rent the home out, sell soon after closing, or buy through a trust, speak with a lawyer or accountant first.

Frequently asked questions