Saving Half a New Housing Rebate After an Early Move

The situation

Rosa worked as a court clerk and ran a small incorporated consulting practice on the side, advising other court offices on scheduling and case-management systems. In 2023, she and her partner Elena, an elementary school teacher, bought a newly built semi-detached home from a builder in Peterborough, planning to make it their home for years to come.

At closing, they did what most buyers of new construction do: they signed over their entitlement to the GST/HST new housing rebate to the builder, who applied it directly against the purchase price. The rebate exists to offset some of the sales tax charged on newly built or substantially renovated homes, and it is available when the buyer, or a close relation of the buyer, intends to use the property as their primary place of residence. The credit at closing was roughly $31,500 — money they never had to come up with, because the builder absorbed it and reduced the price accordingly.

Nothing about the purchase looked unusual. They moved in within weeks of closing, updated their addresses, and settled into the neighbourhood. The rebate was the kind of detail that, once claimed, most buyers never think about again.

What the review found

About nine months after closing, Rosa's consulting corporation was awarded a two-year contract that required her to work on-site near a regional court office well outside Peterborough. She and Elena decided not to sell. Instead, they rented the home to a tenant, Tomasz, intending to return once the contract wrapped up, and moved into a rental unit closer to Rosa's new posting.

Roughly a year later, the Canada Revenue Agency opened a compliance review of the rebate. The trigger was straightforward: their tax filings showed a different mailing address within a year of the closing date, which is exactly the pattern CRA's rebate compliance program is built to flag. The agency's position was that if the home had genuinely been acquired as a primary residence, the couple would not have moved out and rented it within the first year.

CRA proposed to deny the rebate entirely and demanded repayment of the full $31,500, plus arrears interest that had been accumulating since the date the rebate was credited. By the time the file reached Rosa and Elena, interest under the Excise Tax Act had pushed the total demand to roughly $52,000 — a figure that grows the longer a rebate stays in dispute, because interest keeps accruing on the outstanding amount regardless of how long the review takes.

The couple's instinct was that they had done nothing wrong. They had lived in the home, paid its utilities, registered Elena's employer and Rosa's business address to it, and only left because of a work opportunity neither of them had anticipated when they bought the property. The question was whether that was enough to satisfy the rebate's occupancy requirement, and whether CRA would see it the same way.

What we did

1. Reviewed the rebate conditions against the actual timeline. The new housing rebate does not require indefinite occupancy — it requires that the buyer genuinely intended and acted on using the property as their primary residence at the time of purchase. A change in circumstances after the fact does not automatically undo that intention, but it does need to be supported with evidence, not just asserted.
2. Assembled a documentary timeline of occupancy. We gathered utility account records showing service start dates, the change of address on Rosa's and Elena's driver's licences and health cards, Elena's school board employment records listing the Peterborough address, home insurance records naming it as their principal dwelling, and moving company receipts from both the move in and the later move out. Together, these established close to nine months of continuous, genuine occupancy before the relocation.
3. Documented the reason for leaving as involuntary, not planned. We obtained a letter from Rosa's consulting corporation confirming the contract award date and its requirement that she work on-site, showing the relocation was a response to a new opportunity rather than a pre-existing plan to rent the property out from the start.
4. Filed a notice of objection before the deadline. A notice of objection formally disputes a CRA assessment and preserves the right to have it reviewed by an appeals officer rather than accepting the reassessment as final. Missing the objection deadline would have closed off this route entirely, so this was treated as the first priority once the file came to us.
5. Negotiated with the CRA appeals officer assigned to the file. Rather than arguing the rebate should survive in full, we focused the argument on the period of genuine occupancy that the evidence clearly supported, while acknowledging that the property had, in fact, become a rental before the couple returned to it — because the contract was later extended and they ultimately sold rather than moving back.

The outcome

The appeals officer accepted that Rosa and Elena had genuinely occupied the home as their primary residence for the initial period before the relocation, and that the reason for leaving was a real change in circumstances rather than a plan formed before closing. That went a long way toward softening CRA's position that the rebate should be denied outright.

But it did not resolve the file in the couple's favour entirely. Because the property was rented out within the first year and the couple never returned to it — the contract was extended twice, and they eventually sold the home instead of moving back — CRA maintained that the rebate could not be sustained in full. The compromise reached was a repayment of roughly $18,000, well below the roughly $52,000 originally demanded, with the arrears interest recalculated to apply only from the point CRA formally identified the issue rather than from the original credit date, and no penalty applied on top.

For Rosa and Elena, the outcome was not a clean win, and neither side got everything they wanted. CRA gave up more than half its claim in recognition of genuine occupancy; the couple accepted that renting the property out within the first year, even for good reason, meant some portion of the rebate could not be justified. Both sides could point to the settlement as defensible, which is usually the sign of a workable compromise rather than a forced one.

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