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Monday, April 22, 2013

HST Rebate for New Homes

  • HST does not apply to resale transaction of residential property; it does apply to commercial or store plus apartment unit.
  • HST for new home: two portions: rebate portion and non-rebate portion. Builders normally include the full amount of HST in the purchase price. If buyer is for personal use, then there will be no issue of HST on closing; (there will be no rebate of HST to buyer);
  • If the buyer is buying for investment, then on closing date he should inform the builder that he is an investor, he will pay the rebate portion HST to the builder. (The buyer needs to make oath in front of his lawyer for this if he is buying for personal living). If he is buying for rental purpose, with one year lease agreement and original statement adjustment on closing, he can apply to CRA and ask for rebate of the paid HST; within 3-4 month he can get the rebate from CRA.
  • If the buyer lies to the lawyer/builder on closing, then the builder will have difficult to get the rebate from CRA. Then the CRA will ask the buyer to provide proof that he lived inside the unit.

GST524 GST/HST New Residential Rental Property Rebate Application: search CRA website

HST rebate calculation:
Rebate of the Federal portion of HST (used to call GST, 5%):
Price less than $350,000, rebate = 36% of the total Federal portion of HST (GST, 5%);
Price greater than $350,000, less than $450,000, Rebate = ($450,000 – price) /100,000 X $6300;
Price equal to or greater than $450,000, Rebate =  0

Rebate of the Federal portion of HST reach maximum at $350,000.

Rebate of the Provincial portion of HST (used to call PST, 8%):
Price less than $400,000, then Rebate = 75% of the Total Provincial HST (PST, 8%);
Price greater than $400,000, there is no rebate on the price portion of over $400,000.

Rebate of the Provincial portion of HST reach maximum at $400,000.

House price = $300,000,
GST rebate = $300,000 X 5% X 36% = $5,400,
PST Rebate = $300,000X 8% X 75% = $18,000, total =23400

House price = $400,000,
GST rebate = ($450,000 - $400,000) / 100,000 X $6300 = $3,150,
PST Rebate = $400,000X 8% X 75% = $24,000, total =27150

  House price = $500,000,  GST rebate = $0,
PST Rebate = $24,000, total = 24000

Transitional GST Rebate: 1%

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