New Home Rebates
Buyers of new homes in Ontario will be affected by the province’s proposal to harmonize its retail sales tax with the federal goods and services tax. As a result, new homes in Ontario that are subject to GST (5%) will become subject to the provincial component of the HST (8%) as well.
Ontario recently released transitional rules for some new housing transactions that will straddle July 1, 2010, the effective date of the harmonized tax. Ontario also proposed changes to the new housing rebate announced in its 2009 budget.
Under the enhanced rebate announced on June 18, 2009, the $500,000 threshold to qualify for a rebate will be eliminated. As such, new homes purchased as primary residences across all price ranges will qualify for a rebate of up to $24,000 of the 8% provincial component of the HST.
The rebate will be 75% of the provincial portion of the HST payable on the purchase of a new home, up to a maximum rebate of $24,000 (i.e., $400,000 × 8% provincial component = $32,000 ×75% rebate = $24,000).
New home buyers may also be eligible for the federal GST new housing rebate, which generally equals 36% of the tax paid on the first $350,000 of the purchase price. The amount of the GST rebate is phased out on a straight-line basis for homes priced between $350,000 and less than $450,000.
| Price of Eligible New Home (not including GST or HST) | GST Portion — New Housing Rebate | Ontario Portion — New Housing Rebate | Total Rebates |
| $350,000 | $6,300 | $21,000 | $27,300 |
| $400,000 | $3,150 | $24,000 | $27,150 |
| $450,000 and above | $0 | $24,000 | $24,000 |
Qualified housing includes both newly constructed and substantially renovated homes, co-operative housing, owner-built housing, housing on leased land, mobile homes and modular homes for use as primary residences.
