The Canadian Revenue Agency’s HST Rebate program has been in
effect since July 2010 when the CRA introduced HST generally in Ontario. HST is
charged on all new build properties in Ontario, so all properties that are
purchased as preconstruction from a developer have HST applied to them. The purpose of the HST rebate is to discount
a percentage of the HST on the purchase of new build properties for those
purchasing as their own home or for investment, provided certain eligibility
criteria are met. To make things more
complicated, purchase agreements usually include the non-rebateable portion of
the HST in the sticker price. The
remaining portion of HST is due on closing. The HST is always paid in full. This amount varies and is weighted based on the purchase price of the
new build (Call us at HST Relief to give you a free consultation on how much
HST you owe on closing – 1.866.832.1990). The mains question real estate purchasers have are: Who pays the
remaining HST due on closing? And, under
what circumstances is one eligible to get the portion of HST paid on closing
back though CRA’s HST rebate program?
Who pays the remaining HST due on closing?
If the new build property purchased from a builder will be
used as the primary residence for all those who are on title of the property,
then the builder will pay the HST for the client on closing. The standard purchase agreement is written
such that it assumes the purchaser will be using the property as a primary
residence and there is a build in assignment of the HST rebate to the
builder. In this case, the builder pays
the HST on closing for the purchaser and reclaims it themselves through
CRA. The net effect for the purchaser as
a primary residence is that they owe nothing on closing in terms of HST. The situation is different if the new
purchase will not be a primary residence. In that case, the purchaser will owe this portion of HST due on closing
along with all other closing costs.
If you are concerned about the HST due on closing, please
call us for a free consultation. HST Relief can inform you of what to expect
and tell you about our loan and bridge financing services to cover the HST you
will need. HST Relief was founded by
real estate investors and a mortgage broker who have 15 years’ experience in
the real estate finance industry. Call
us to find out how we can lend you the cash you need to close your investment
properties.
Who is eligible for the HST Rebate?
Anyone who closes a new build investment property as a
primary residence of the purchaser(s) or with a 1 year lease are eligible to
file for the HST rebate (some exceptions apply – call us for more details on
your specific situation). In the case of
a primary residence, the builder credits the purchaser the HST New Housing
Rebate upon closing. Investors are
eligible to reclaim the HST they paid on closing through the New Residential
Rental Rebate Program. To file for this,
investors need a 1 year lease with a tenant for the new construction
property. There are several traps that
CRA uses to deny issuing the rebate, so it is important to speak to an expert
before closing the property and before attempting to file. Call us for more information on how we can
obtain your rebate of up to $30,000 today. For more online reading, check out our clients’ FAQs with our team’s
detailed answers posted
here.