Taxes Related to Buying a New Home
Saturday Nov 16th, 2019
HST Rebate on new home purchase:
In most countries, the display price is what you pay for the products you buy. In Canada, you always pay more than the display price, because the price shown on the display doesn't include GST/HST/PST. This is normal for the most Canadians but may be confusing for the visitors or people who are new to Canada.
However, when Canadians buy a new home from a builder, they pay the price agreed in the purchase and sales agreement. This may lead one to think that the new homes (like the old ones) are not subject to GST/HST.
The new houses in Canada are subject to the sales tax. The tax on sales transactions is Ontario is called HST (Harmonized Sales Tax). HST rate in Ontario at the date of publication of this blog is 13%. This means that every new house purchased from a builder is supposed to includes 13% HST. If house is being purchased for the personal use of the purchaser or for his/her close relative, Government offers rebate on this 13% tax. Builders incorporate this rebate in the price calculations for the purpose of purchase and sales agreement. If a purchaser is not buying the property for personal use, they would not be entitled to the HST rebate and would have to pay the additional price at the time of the closing.
If a buyer purchases the home for his personal living but changes his or her mind later and is not the first occupant of the property, CRA can ask the rebate money back with interest if such rebate was claimed at the time of the purchase.
CRA allows the rebate to be applied in the closing price if the home was intended to be used by the purchaser or close family e.g. a child, or parent. However, if intended use of the property is lease or rental then an application for the rebate can be filed to CRA after the closing but within two years from the date of purchase. If the home is purchased neither for the personal (or family) use nor for the rental then no rebate is allowed.
Many home buyers who are unaware of these rules sometimes end up loosing significant sums of money because of not following the CRA rules property. If you have recently (within last two years) have purchased a new home, you should discuss this transaction with us. You can reach us at 647-500-7869 to book an appointment for a free consultation. Visit us sellwithnabeel.ca
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