Who Qualifies for an HST Rebate on a Rental Property in Ontario?

If you are buying a new condo or house to rent out, or building or renovating one, HST can be a large part of your cost. A rebate on new residential rental property may return some of it, but only if your situation fits the rules.

This article explains who generally qualifies, how the federal and Ontario rebates differ, and the deadlines and paperwork that trip people up. Your own facts matter, so an accountant or lawyer should confirm how this applies to you.

The basic conditions for the rebate

The federal rebate is found in section 256.2 of the Excise Tax Act. The person claiming it must not be a co-op housing corporation, and must be either a buyer (who is not the builder) of a residential complex or a builder who is treated as buying the property on a lease.

• Tax must first become payable on the purchase.
• The unit must be a qualifying residential unit of the person claiming.
• The person must not be able to claim an input tax credit for the tax.
• The federal rebate also requires long-term residential use of the unit.

If you plan to use the unit mainly for something other than long-term residential rental, or you can recover the tax in another way, you may not qualify. These points depend on the facts, so confirm them before you rely on the rebate.

Buying from a builder, building yourself, or buying a renovated home

The rebate is designed for each of these routes, but the claimant and the documents differ. The claimant is either a buyer who is not the builder, or a builder who is treated as buying on a lease.

The builder cannot simply credit the rebate to you on closing. You apply directly to the CRA.

Federal versus Ontario rebate

There are two rebates, and they work differently. The federal rebate is the lesser of $6,300 and 36% of the GST or federal HST payable, reduced by a formula based on the unit's fair market value. It is gradually reduced between $350,000 and $450,000, and there is no federal rebate at $450,000 or more.

The Ontario rebate is 75% of the provincial part (8%) of the HST, up to $24,000 per qualifying unit, regardless of fair market value. For leased land the cap is $7,920 per lot or site. So a unit with a fair market value of $450,000 or more may get no federal rebate but may still get the Ontario rebate.

Special rules for purpose-built rental and renovations

Two categories have their own conditions and should not be mixed up with the standard rule above.

• Purpose-built rental housing: the federal rebate rises to 100% of the GST or federal part of HST with no phase-out thresholds, where construction begins after September 13, 2023 but before 2031 and is substantially completed before 2036.
• That category needs at least 4 units (each with a private kitchen, bath and living area) or 10 or more units, with at least 90% held for qualifying rental.
• Substantial renovation (Type 6, construction starting on or after April 1, 2026): construction or renovation must begin between April 1, 2026 and March 31, 2027, be substantially completed by December 31, 2029, and tax must be payable by December 31, 2032.
• For that renovation category, fair market value must be under $1,850,000.

There have also been announcements about enhanced temporary rental rebates. Because details can change, confirm what is currently in force with the CRA or an accountant before building them into your numbers.

Filing the claim and the deadline

You file one GST524 application, which covers both the federal and Ontario rebates, with the Ontario schedule RC7524-ON attached. You must file GST524 even if only the Ontario portion applies. Forms can be sent or filed online through a CRA account.

A purchaser or landlord must file within two years after the end of the month in which tax first becomes payable on the purchase, and the Act says no rebate is paid unless the application is filed in that time. Whether any relief exists for a late claim depends on the facts, so get advice early rather than hoping for flexibility.

What to do next

• Confirm whether you are a purchaser, a builder, or buying a renovated property, and which category fits.
• Confirm the unit will be used for long-term residential rental and that you cannot claim an input tax credit for the tax.
• Get the fair market value so you can estimate the federal rebate.
• Collect the statement of adjustments, purchase agreement and lease or rental agreement.
• Note the month tax first became payable and calendar the two-year deadline.
• Have an accountant or lawyer review your situation before you file.

Frequently asked questions