Harmonized Sales Tax: Ontario New Housing Rebate

GST/HST Info Sheet GI-079
June 2010

This info sheet provides information for individuals who purchase new housing together with the land, new housing together with leased land, or qualifying shares in a cooperative housing corporation (housing co-op). It explains the new housing rebates that may be available where the HST applies to the purchase.

For information on new housing rebates available to individuals who build or substantially renovate, or hire someone else to build or substantially renovate, their own home, or who buy a new mobile or floating home, refer to GST/HST Info Sheet GI-082, Harmonized Sales Tax: Information on Owner-built Homes, Mobile Homes and Floating Homes in Ontario.

For information on new housing rebates available to landlords of newly constructed or substantially renovated housing in Ontario, refer to GST/HST Info Sheet GI-091, Harmonized Sales Tax: Information for Landlords of New Rental Housing, and to GST/HST Info Sheet GI-093, Harmonized Sales Tax: Ontario New Residential Rental Property Rebate, which will be published soon.

Builders who sell newly constructed or substantially renovated housing in Ontario should refer to GST/HST Info Sheet GI-083, Harmonized Sales Tax: Information for Builders of New Housing in Ontario.

New housing

The term "new housing" used throughout this info sheet refers to newly constructed or substantially renovated housing. Housing that has been substantially renovated is generally given the same treatment under the GST/HST as newly constructed housing. Extensive modifications must be made to the housing in order to meet the definition of a "substantial renovation" for GST/HST purposes. For a full explanation of the factors to consider in deciding if a substantial renovation has taken place, refer to GST/HST Technical Information Bulletin B-092, Substantial Renovations and the GST/HST New Housing Rebate.

How will the HST apply?

Purchasers will generally be required to pay the HST when they purchase new housing if, under a written agreement of purchase and sale for the housing, both ownership and possession of the housing are transferred to the purchaser after June 2010.

For more information on the application of the HST to new housing and the exception for written agreements of purchase and sale that were entered into on or before June 18, 2009, refer to GST/HST Info Sheet GI-077, Harmonized Sales Tax: Purchasers of New Housing in Ontario.

GST/HST new housing rebate - Purchase of house and land

An individual who purchases new housing together with land from a builder may be entitled to claim a GST/HST new housing rebate in respect of the GST, or the federal part of the HST, paid by the individual on the purchase.

The GST/HST new housing rebate is generally available if the individual purchases the new housing for use as the primary place of residence of the individual or a relative, the purchase price (not including the GST/HST) is less than $450,000, and all of the other rebate conditions are met.

For information on all of the conditions for claiming this type of new housing rebate, refer to the section "Application Type 1A or 2: You bought the house and land from the same builder" in Guide RC4028, GST/HST New Housing Rebate.

Ontario new housing rebate - Purchase of house and land

An individual who purchases new housing together with land from a builder may be entitled to claim an Ontario new housing rebate in respect of the provincial part of the HST paid by the individual on the purchase.

The rebate will be available if the individual:

• is entitled to claim a GST/HST new housing rebate in respect of the federal part of the HST; or
• would be entitled to claim that rebate if the purchase price of the housing were less than $450,000.

The Ontario new housing rebate is equal to 75% of the 8% provincial part of the HST that the individual paid on the purchase of the new housing, up to a maximum rebate amount of $24,000. The Ontario new housing rebate is available regardless of the purchase price provided that the individual meets all of the other conditions for claiming a GST/HST new housing rebate. That is, there are no phase-out or maximum purchase price thresholds for the Ontario new housing rebate.

GST/HST new housing rebate - Purchase of house together with lease of land

An individual who purchases new housing from a builder and leases the related land from that builder under the same written agreement to buy the housing may be entitled to claim a GST/HST new housing rebate, where the builder had to account for the GST/HST on the fair market value of the new housing (building and land).

The GST/HST new housing rebate is generally available if

• the lease for the land gives the individual the option to buy the land, or is at least 20 years long,
• the individual purchases the housing for use as the primary place of residence of the individual, or a relative,
• the fair market value of the housing (building and land) is less than $508,500, and
• all of the other rebate conditions are met.

For information on all of the conditions for claiming this type of new housing rebate refer to the section "Application Type 1B or 5: You bought the house and lease the land from the same builder" in Guide RC4028.

Ontario new housing rebate - Purchase of house together with lease of land

An individual who purchases new housing and leases the related land from the same builder may be entitled to claim an Ontario new housing rebate, where the builder had to account for the HST on the fair market value of the new housing (building and land).

The rebate will be available if the individual:

• is entitled to claim a GST/HST new housing rebate in respect of the federal part of the HST; or
• would be entitled to claim that rebate if the fair market value of the housing (building and land) were less than $508,500.

The Ontario new housing rebate is equal to 5.31% of the price paid for the building part of a house on leased land, up to a maximum rebate amount of $24,000. The Ontario new housing rebate is available regardless of the purchase price provided that the individual meets all of the other conditions for claiming a GST/HST new housing rebate. That is, there are no-phase out or maximum fair market value thresholds for the Ontario new housing rebate.

GST/HST new housing rebate - Purchase of a share in a housing co-op

An individual who acquires new housing in a cooperative housing complex by purchasing a share in the housing co-op may be entitled to claim a GST/HST new housing rebate, where the co-op paid GST/HST on the acquisition of the new housing, or had to account for the GST/HST on the fair market value of the new housing (building and land).

For information on the conditions for claiming this type of new housing rebate refer to the section "Application Type 3: Co-operative housing" in Guide RC4028.

Ontario new housing rebate - Purchase of a share in a housing co-op

An individual who buys a share in a housing co-op may be entitled to claim an Ontario new housing rebate in respect of the provincial part of the HST, where the co-op paid HST on the acquisition of the new housing, or had to account for the HST on the fair market value of the new housing (building and land).

The rebate will be available if the individual:

• is entitled to claim a GST/HST new housing rebate in respect of the federal part of the HST; or
• would be entitled to claim that rebate if the purchase price of the share were less than $508,500.

The Ontario new housing rebate is equal to 5.31% of the price paid for the share, up to a maximum rebate amount of $24,000. The Ontario new housing rebate is available regardless of the purchase price provided that the individual meets all of the other conditions for claiming a GST/HST new housing rebate. That is, there are no phase-out or maximum purchase price thresholds for the Ontario new housing rebate.

How to apply for the Ontario new housing rebate

The purchaser would apply for the Ontario new housing rebate by completing a provincial rebate schedule, RC7190-ON, GST190 Ontario Rebate Schedule that will form part of the GST/HST new housing rebate application, Form GST190, GST/HST New Housing Rebate Application for Houses Purchased from a Builder.

These forms can be used for all of the different types of rebates explained in this info sheet. The purchaser must complete both forms to apply for the rebate, even if the purchaser is only entitled to claim the Ontario new housing rebate. Line by line instructions for completing these forms will be included in Guide RC4028.

The GST 190 Ontario Rebate Schedule and a revised GST/HST new housing rebate application will be available on the CRA Web site by July 1, 2010. The rebate application and the rebate schedule will also be available in Guide RC4028.

All forms necessary to claim a GST/HST new housing rebate are available on the CRA Web site at www.cra.gc.ca/gsthstpub.

Housing rebates paid or credited by builder

The purchaser and the builder may agree to have the builder pay or credit both the amount of the GST/HST new housing rebate and the Ontario new housing rebate to the purchaser (or only the Ontario new housing rebate if the purchaser is not entitled to claim the GST/HST new housing rebate because the maximum threshold for this rebate was exceeded).

The purchaser has to fully complete and sign both forms GST190and RC7190-ON, and provide them to the builder of the new housing who will be required to send the rebate application to the CRA. The purchaser may not file any other rebate application directly with the CRA for this new housing.

Stated price net of rebates

If a purchaser of new housing together with the land agrees to pay the builder an amount for the new housing that includes the HST payable on the purchase net of any GST/HST new housing rebate and the Ontario new housing rebate that the purchaser is entitled to claim and that was credited to the purchaser by the builder, that amount is referred to as the "stated price net of rebates."

Where a stated price net of rebates is used, a calculation must be made to determine the value of the consideration payable for the housing. The value of the consideration must be calculated before the tax payable can be determined. Similarly, the tax payable must be calculated before the amount of the rebates can be determined. Refer to GST/HST Info Sheet GI-085, Harmonized Sales Tax: Stated Price Net of GST/HST New Housing Rebates in Ontario, for details on the formulas used to calculate these various amounts