HST: Issues for New Home Builders

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If you are a new home builder or if you “substantially renovate” client’s homes, you should be aware of the GST/HST New Housing Rebate which may be available to the home owner. This program provides a rebate on part of the GST or the federal part of the HST paid on the construction or purchase of most newly constructed or substantially renovated houses used as their primary place of residence.

In order to qualify, the homeowner must be:

  • Building a home or contracting someone to build one;
  • Buying a newly constructed or substantially renovated home from a builder;
  • Buying a newly constructed house from a builder where they lease the land from the builder under the same agreement to buy the house;
  • Rebuilding a home destroyed by fire; or
  • Buying a share of the capital stock in a newly constructed cooperative housing project.

Generally, applications must be received within two years from the date of possession.

Home builders may be able to apply on their client’s behalf, and then pay the rebate directly to the client or credit them for it in the purchase price. This benefits your client, as they do not have to directly apply themselves and wait to receive their rebate. Home builders are not able to apply for their clients where it is an “owner-built” home. This scenario applies where you build a home for someone on the land they own.

If you apply for the credit on your clients’ behalf, the application must be filed with your GST/HST return. Ensure you receive from them a fully completed and signed Form GST190 and any applicable provincial rebate schedule and worksheet. If you file your GST/HST returns electronically, the rebate application must be mailed immediately after you file. If you are a home builder with taxable revenues of 1.5 million or more, special rules apply. You must use GST/HST Netfile or GST/HST Telefile to file your returns to file your return for the reporting periods where you have paid or credited the amount of the rebate to the buyer.

In addition, your client may be eligible for a rebate on the provincial part of the HST paid for a newly constructed or substantially renovated home. The home must be used as the primary place of residence of the individual purchasing, or a relation of that individual.

In order to ensure you make the most out of this program for your client, contact Lerners LLP. We are here to help!

Matthew Wilson is a lawyer at the London Ontario law firm, Lerners LLP. See his professional biography for more information about Matthew and his work in the area of land development, or email him at mwilson@lerners.ca.