13% HST tax was imposed on new home buyers which include 5% federal tax and 8% Ontario tax as of July 1, 2010, which applies to a builder’s sale of newly constructed or renovated homes where both ownership and possession are transferred after June 30, 2010. There are two exceptions to this rule where the old GST rules will continue to apply – if either ownership or possession was transferred before July 1, 2010 or if a written agreement of purchase and sale was entered into on or before June 18, 2009. The buyer of a residential property should be aware that the buyer is eligible for a rebate for a portion of the HST/GST payable on the transaction. HST/GST Rebates for new homes and rental properties Effective July 1, 2010, buyers of new homes for the purposes of both residency and renting to a tenant may be eligible for a rebate of 71.43% of the provincial component of the HST paid. For example, if one were to buy a new home valued at $500,000, the provincial component of the HST will be 7% or $35,000. Then the buyer will be eligible to get a rebate of 71.43% of $35,000 which is $25,000. The HST/GST rebate on new homes will often be credited by the builder of the new home at closing, in which the buyer will only be required to pay the full HST to the builder at closing and apply for the HST/GST rebate on new homes. To apply for this rebate, an individual buyer would use the Form RC7 190-ON, GST 190 Ontario Rebate Schedule. The HST/GST rebate on rental properties will depend on a number of factors includes the type of property, the purpose to rent the property at the time of purchase and the first use of the property as a rental property. The eligibility criteria for this rebate are technical and will be explained to the buyer by the lawyer when application is made. The HST/GST rebate on rental properties must be applied for after the closing of the sale and the occupancy of the property by a tenant. Please feel free to contact our real estate lawyer to determine the eligibility for the HST/GST rebates on the purchase of new homes, rental properties or to assist in making the application.
This blog was posted by Amit Vig – Toronto real estate lawyer. Amit is regularly involved in complex residential and commercial real estate transactions and enjoys advising clients and corporations from initial creation of the contract to the completion of the transaction.
Sources:http://realestatelawgroup.ca/gsthst-rebates-for-purchasers-of-new-residential-property/; http://fmtlaw.ca/real-estate-corporate-estates-law-hst-rebates-homes-renovations-rental-properties/
