When Is GST/HST Payable on a New Home from a Builder in Canada?

You have signed an agreement to buy a new home, and the building is still going up. One of the first questions is when the GST/HST actually has to be paid, and what that does to any rebate you might claim. The answer matters because several rebate rules are tied to specific moments: completion, the transfer of ownership, and the day someone first lives in the home.

This article walks through those moments in plain language. It does not replace a review of your own purchase agreement and statement of adjustments. The exact point at which tax becomes payable depends on the facts of your deal, so confirm that with a lawyer or accountant. What we can lay out is how the timing links to the federal new housing rebates.

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

Why timing matters for the rebate

When you buy a new home before it is finished, you are usually dealing with a long gap between signing and moving in. The rebate rules do not look only at the price. They also look at when the home was substantially complete, when ownership passed to you, and who first occupied it.

For a house bought from a builder, the base rebate applies where the builder sells a new single unit residential complex or a residential condominium unit to an individual who buys it as their own or a relation's primary place of residence, total consideration is under $450,000, the individual has paid all applicable tax, and ownership transfers after substantial completion.

The key moments and what each one affects

For a house on leased land, the two years run from the date possession was transferred rather than the date of ownership transfer. The statute does not set a number of days within which you must move in, but your intent to use the home as a primary place of residence must be evident at the outset.

How price and tax paid shape the amount

The rebate is a percentage of the tax you paid, not of the price. CRA's guide says to multiply the GST or federal part of HST paid by 36%, capped at $6,300. For a builder purchase, the thresholds are tested against total consideration, which is the purchase price excluding GST/HST and certain other amounts.

• 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 the rebate phases out, and at $450,000 or more the base rebate is nil.
• As an example, with 5% GST paid on a $400,000 home, the amount is capped at $6,300 and the rebate works out to $3,150.

For homes above $450,000, the first-time home buyers' rebate may apply if you qualify. For a new home with total consideration of $1,000,000 or less, it is the lesser of $50,000 and the tax paid, minus any base rebate. Between $1,000,000 and $1,500,000 it phases out, and at $1,500,000 or more it is nil. A buyer who fails the first-time buyer test may still qualify for the regular new housing rebate.

Closing, builder credits and assignments

On closing, the builder may pay the rebate to you or credit it against the price. If it does, you do not send the application, and the builder files it with its return. If the builder does not pay or credit it, you generally have up to two years from the date ownership was transferred to claim it on Form GST190.

Assignments work differently. Only the builder who sells the house can pay or credit the rebate, so an assignee must claim directly from CRA on Form GST190. With an assignment there may be two builders, and you may pay GST/HST to the original builder and to the assignor for the interest transferred. A first-time buyer who takes over another person's builder agreement signed before the cut-off date set out in the Finance announcement cannot claim the first-time buyer rebate.

Be careful about a missed deadline. CRA considers late requests only for owner-built homes in extraordinary circumstances, so a missed two-year deadline on a builder purchase generally means the rebate is lost. Also, a rebate paid to someone who was not entitled to it must be repaid, and if a builder paid or credited it knowing, or when it ought to have known, that the individual was not entitled, both can be jointly liable.

What to do next

• Read your purchase agreement and statement of adjustments to see how GST/HST and any rebate are handled on closing.
• Ask your lawyer or accountant when tax becomes payable on your particular deal, since that depends on the facts.
• Confirm whether the builder will credit the rebate or whether you must claim it yourself.
• Diarize the date ownership transfers, and count two years from there.
• If you claim yourself, send Form GST190 with a copy of the statement of adjustments, and keep supporting records for six years.
• Send the application to the right tax centre: the Sudbury Tax Centre for Sudbury/Nickel Belt, Toronto or Barrie properties, and the Prince Edward Island Tax Centre elsewhere in Canada.
• If more than one person is buying, remember only one individual can claim the rebate, and the others are listed as co-owners.

If your purchase involves an assignment, a corporation or partnership as a co-owner, a bare trust or a home bought for a relation, get advice before closing. Only individuals can claim the new housing rebate, and an individual cannot claim if a partnership or corporation co-owns the house.

Frequently asked questions