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Understanding the New Build/Substantial Renovation Tax Rebate

If you are a new home owner or in proud possession of a newly renovated property then you may be eligible to claim the GST/HST New Housing Rebate in Toronto – but what is this rebate and how do you apply for it? Read on to find out...

New build home owners and those who have undergone a massive renovation to their property may be entitled to claim back some of this money from the tax man. This tax rebate could see you in a far better position to start decorating or to add the finishing touches to your spanking new home. Yet not everyone knows about it, not everyone uses it and not everyone gets to reap the benefits.

What is the New Housing Rebate?

The New Housing Rebate is run throughout the provinces in Canada and varies from place to place. It is sometimes called the GST/HST New Housing Rebate because the money that you are rebated comes from a break in your contributions to the Goods and Services Tax and the Harmonized Sales Tax. This tax is broken down into two different parts which require two different sets of paperwork – one for owner-built homes and one purchased via builder. In both instances you will still qualify, it's just that the filing is a little different.

Both new build owners and those whose homes have undergone 'substantial' renovations are eligible to apply for this rebate – and that could mean you! There are a few in's and out's of the rules so let's take a closer look and find out exactly who qualifies.

Who Qualifies for the New Build/Substantial Renovation Tax Rebate?

Those who have hired someone to build a new house for them automatically qualify. As do those that have built a new home on land they already own. If you bought from a builder you will automatically qualify if you purchased a newly built house or if you leased the land you had your new home built on from the builder.

The rules get a little more complex for renovations. A substantial renovation means that at least 90% of your existing home must have been removed or replaced in order for you to qualify. Otherwise you might qualify if you have had a big extension added...and by big we mean double-your-living-space big. These same conditions apply whether you renovated yourself or whether you bought a renovated home from a builder.

The final allowance is for those that have converted a non-residential property into their home. You can find the exact wording and rulings on the Canadian Government's website by following this link. You should also be aware that the property needs to be your primary residence in order for you to claim this rebate.

Conditions of the GST/HST New Build/Substantial Renovation Tax Rebate

There are a few more conditions: as with anything governmental there is a certain amount of bureaucracy that can't be avoided. On top of the paperwork to be filed there are also conditions as to what constitutes a 'house'. For the purposes of this rebate a house is classed as a detached or semi-detached, a duplex, a condominium. A Co-op housing unit, a floating home, a townhouse. A modular home, a B & B or guesthouse and even a mobile home!

An additional condition is that the property owner is a person and not a named organization or business. They have different rebate laws entirely and can claim separately. You can also claim the rebate on behalf of a relation (in order to accommodate spouses) but the home must be either your or their primary residence. A further clause is that you need to fill out your forms and apply for your rebate within two years of moving into the property, after which it looses its appeal as a new build.

This tax rebate can also be claimed by those that bought a property specifically to rent out to others as a place of residence; so if you are helping your children onto the property ladder you can be rewarded with cash back on your taxes!

What Forms Do I need To Fill Out?

If you have bought your new build home from a builder then you will need to either download or order form GST190, GST/HST New Housing Rebate Application for Houses Purchased from a Builder.

If you have built your own home on your own land then you will need to fill in form GST191, GST/HST New Housing Application for Owner-Built Houses. You will also need to fill in form GST191-WS Construction Summary Worksheet to give full details of the building work done. This helps to decide whether or not you qualify so be sure to fill it in to the best of your ability.

How Much Can I Expect to Get Back?

In Ontario the maximum rebate rate is $24,000! The New Build Tax Rebate is specifically known as the Ontario HST Rebate for New Homes, while the purchasing of a rental property is known as the Ontario New Residential Rental Property Rebate (or the NRRPR for short). You should be aware that you cannot claim back more than $400,000 even if the cost of your house was greater than this, which is why the limit is set to $24k.

The province of Ontario rolled out the HST Rebate in response to the implementation of the Harmonized Sales Tax in 2010. This tax made house prices jump up a little and so the rebate was granted as a way to offset the extra costs of buying a newly built home. It has the double impact of encouraging business because of its specific targeting towards new builds and renovations.

How Long Will I have To Wait?

Rebates will usually be with you within two months of completion and filing of the paperwork.

Further Help

For more information on this subject and further help negotiating the complex Ontario tax system you can download the governmental guidance booklet free of charge. You can download this from the Canadian Revenue Agency directly by following this link.