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GST New Housing Rebate Program

You may be eligible to claim a rebate for a part of the GST you pay on the purchase price or cost of building your home if:
  • you buy a new or substantially renovated home (including the land or if you lease the land) from a builder;
  • you buy a new mobile home (including a modular home) or a floating home from a builder or vendor;
  • you buy a share of capital stock of a co-operative housing corporation;
  • you construct or substantially renovate your own home, or carry out a major addition (or hire another person to do so); or
  • your home is destroyed in a fire and is subsequently rebuilt.

Details

  • Resale homes are exempt from the 6% GST.
  • New homes are subject to the 6% GST. New home buyers can apply for a 36 % rebate of the 6% GST applicable to the purchase price to a maximum of $7560 for homes costing less than $350,000 before GST.
  • For new homes priced between $350,000 and $450,000 before GST, the GST rebate would be reduced proportionately.
  • New homes priced $450,000 before GST or higher would not receive a rebate.
  • NOTE: In the Greater Toronto Area, most builders include the GST in the price of the house, and any rebate would be assignable to the builder as they would be absorbing the net GST cost.

For additional questions on the GST rebate program, call Revenue Canada's toll-free-enquiry service at 1-800-565-9353 or contact your Revenue Canada tax services office listed in the blue pages of your telephone book. You can also access through www.ccra-adrc.gc.ca

GST Reduction Information

November 9, 2007 -- A reduction in the GST from 6 per cent to 5 per cent was announced by the federal government on October 30, 2007. With regard to the purchase price of residential properties, GST only applies to sales of newly constructed and substantially renovated homes. GST is not applied to the purchase price of resale homes, but it does apply to REALTOR® commissions. The reduced rate will become effective on January 1, 2008; however, the reduced rate will apply to the purchase price of new homes immediately, subject to transitional rules detailed below (Note: This summary has been reviewed by the Canadian Real Estate Association for accuracy).

REALTOR® Commissions

GST is generally payable when an invoice is issued. However, since commissions do not typically become payable until the transaction closes, the closing date is generally the relevant date for calculating the applicable GST rate. The GST rate will depend on when the GST on the commission is paid or payable, as follows:

  • If GST becomes payable, or is paid without having become payable, before January 1, 2008, the rate of 6 per cent will apply.
  • If GST becomes payable on or after January 1, 2008, without having been paid before that day, the rate of 5 per cent will apply.
  • If GST is paid on or after January 1, 2008, without having become payable before that day, the rate of 5 per cent will apply.

Purchase Price of New Homes

Ownership or Possession Transferred before January 1, 2008: Generally, the 6 per cent rate will apply if ownership of the property, or possession of it under the agreement of purchase and sale, is transferred to the buyer before January 1, 2008.

Ownership and Possession Transferred on or after January 1, 2008: The 5 per cent rate will apply if both ownership of the property and possession of it under the agreement are transferred to the buyer on or after January 1, 2008. Note the special transitional rule for new residential housing below.

Sales of New Housing under Written Agreements Entered Into on or before October 30, 2007 Where Both Ownership and Possession Transferred on or after January 1, 2008. The Following Rules Apply:

  • Agreements of Purchase and Sale entered into on or before October 30, 2007 but after May 2, 2006, the 6 per cent rate will apply.
  • Agreements of Purchase and Sale entered into on or before May 2, 2006, the 7 per cent rate will apply.
  • In both of these circumstances, the purchaser will be entitled to file a claim directly with the Canada Revenue Agency to be paid a Transitional Rebate that reflects the GST rate reduction to 5 per cent, net of any corresponding rebate adjustment.

For more information, please contact the Canada Revenue Agency (GST Inquiries) at 1-800-959-8287.

 

 

12/14/07

Note to users: Although Ilenna Tai and PropertyToronto.com endeavour to ensure the accuracy and timeliness of information, it is not guaranteed. Ilenna Tai and PropertyToronto.com accept no responsibility for any loss arising from any use or reliance on the information contained herein.

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