Substantial Renovation GST/HST Rebate: Does Your Home Qualify in Canada?

Gutting a house down to the studs and rebuilding it is a big project, and the GST/HST you pay along the way can be large. Many people ask whether the federal government treats a rebuilt home like a brand-new one for rebate purposes. In some cases it does, but the test for what counts as a substantial renovation is strict.

This article explains the general federal rules for the GST/HST new housing rebate where a home has been substantially renovated. It covers who can claim, how the price limit works, the deadline and the records to keep. Your own facts can change the result, so treat this as a guide to the questions to ask.

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

What counts as a substantial renovation

A substantially renovated home can qualify for the new housing rebate in the same way a new home does. The key is the size of the work. Generally, at least 90% of the interior of an existing house must be removed or replaced, and only livable areas are counted.

In plain words, a new kitchen, new bathrooms and fresh flooring are usually not enough. The work has to be close to a complete rebuild of the inside of the house. If you are unsure whether your project reaches that level, ask your contractor or accountant to compare what was removed against the whole livable interior before you rely on the rebate.

Who can claim the rebate for a renovated home

An individual who substantially renovates a house, or hires someone to do so, can claim the owner-built rebate if the home will be their primary place of residence or that of a relation. Only individuals can claim. Partnerships and corporations cannot, and an individual cannot claim if a partnership or corporation co-owns the house.

• The intent to use the house as a primary place of residence must be evident at the outset of the renovation.
• A recreational cottage, an investment property or a house you plan to use later, such as in retirement, does not qualify.
• Relations include parents, children, descendants, siblings, spouses, common-law partners and adoptive relations, and for this rebate former spouses and former common-law partners also count.
• If more than one person owns the house, only one individual can claim, and the others are listed as co-owners on the application.

Price limits and how much the rebate is

For an owner-built or substantially renovated home, the limit is tested against fair market value, which is the highest price the home would bring in an open and unrestricted market. That value is measured on substantial completion, and it must be under $450,000 for the base rebate to apply.

The rebate is calculated as A × ($450,000 − B) ÷ $100,000. A is the lesser of 36% of the tax paid and $6,300 at 5% GST, and B is the greater of $350,000 and the fair market value. Because the rebate is a percentage of tax paid and not of price, the tax you actually paid drives the amount.

There is a separate first-time home buyer top-up for owner-built homes. Construction or renovation must begin after March 19, 2025 and before 2031, and be substantially complete before 2036. The top-up is A × [($1,500,000 − B) ÷ $500,000] minus any base rebate, where A is the lesser of $50,000 and the tax paid, and B is the greater of $1,000,000 and the fair market value. A person who fails the first-time buyer test may still qualify for the regular rebate, and the top-up can be claimed in addition to it.

Deadlines, records and selling soon after

You must apply within two years after a base date. The base date is the earliest of two years after first occupancy, the ownership transfer date or substantial completion. For example, substantial completion on April 30, 2026 gives a deadline of April 30, 2028, even if the owner moved in later.

The Minister may allow a later filing, but CRA considers late owner-built requests only in extraordinary circumstances. Do not count on that.

• Only original invoices in the claimant's or co-owners' names are accepted.
• Send invoices only where GST/HST was not charged.
• Keep original invoices and records for six years.
• If you sell soon after finishing, the sale of an owner-built house is generally exempt if you are not a builder for GST/HST purposes and claimed no input tax credits, but it may be taxable if you had a primary or secondary intention to sell, and an ineligible rebate must be repaid.

What to do next

• Write down what share of the livable interior was removed or replaced, with the contractor's scope of work.
• Confirm the home is, or will be, the primary residence of you or a relation.
• Get a realistic fair market value estimate for the finished home.
• Gather original invoices in your name and note the substantial completion date.
• Calendar your two-year filing deadline from the base date.
• If you bought a home that a builder renovated, or you plan to sell soon, ask a lawyer or accountant how the rules apply to your facts.

Frequently asked questions