HST Rebate on New Homes in Ontario

HST is one of the most confusing parts of buying a new home in Ontario. This guide explains how the federal and Ontario new-housing rebates typically work, why the price you see on the sticker is usually the price you pay for an owner-occupied home, and what to confirm with an accountant if you are buying to lease out.

The two rebates you will hear about

Ontario has two rebates that apply to new-home HST: the federal GST/HST New Housing Rebate and the Ontario New Housing Rebate. Together they are usually referred to as the new housing rebate. They are separate programs but they are almost always applied together on a new-home purchase.

Federal portion

The federal portion applies to the GST component of the HST. It phases out at higher purchase prices, which is why most large-city new-home purchases only recover part of the federal portion.

Ontario portion

The Ontario portion applies to the provincial component of the HST and is capped at a maximum amount. Because it is a fixed cap, it applies to most Ontario new-home purchases up to the cap regardless of price.

How the rebate is usually delivered

For an owner-occupier buying a new home like Spruce Trails, the standard practice is that both rebates are assigned to the builder at closing. Your agreement of purchase and sale spells out the assignment and shows a purchase price that already reflects the rebates. In practical terms, you sign for the number on the sticker and the HST math happens behind the scenes.

What changes if you are buying to lease out

If your intention on closing is to rent the home to a tenant, the new housing rebate is not available and the builder cannot assign it as they would for an owner-occupier. In that case, you generally pay the full HST at closing and apply for the New Residential Rental Property Rebate yourself once you have a signed lease. The rebate mechanics are broadly similar, but the cash flow and paperwork are different.

Cash flow implications

Because you may pay full HST at closing and reclaim the rebate later, investors need to plan for the extra outlay in the closing statement even if the eventual net cost is similar to an owner-occupier's.

Special cases that change the answer

Several situations move HST out of the standard rebate lane. Buying and immediately assigning your agreement of purchase and sale, changing your intended use between signing and closing, or purchasing through a corporation each change how HST and the rebate are treated. If any of those apply, get accounting advice before closing.

How this shows up at Spruce Trails

Spruce Trails will publish its price list once the launch is confirmed. As with other new-home communities in Ontario, expect the price you see for owner-occupied purchases to already reflect the assigned new-housing rebate. If you are buying to rent, tell the sales team early so the paperwork is set up correctly and your accountant can plan the rebate claim after closing.