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?

 

 

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.

 

 

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.