HST Relief For Buyers, Although Temporary

This article was originally published on Law360TM Canada (www.law360.ca), part of LexisNexis Canada Inc.

On March 25, Ontario government announced some temporary relief for buyers who are purchasing new homes. The Harmonized Sales Tax (HST) rebate in Ontario is being expanded to all buyers to a maximum of $130,000.00. Both provincial and federal governments will eat up the entire 13% HST. The province will cover its 8% and federal will cover 5% of the HST.

Sounds great!! But the expansion proposed comes with some conditions. There are eligibility requirements, limit to property purchase price value, rebate amounts, construction requirements and a duration component to it. Broadly, I would divide this expansion into two segments. The first is the purchase price brackets or limits with its rebate amount and second is the eligibility factor.

Under the purchase price brackets and its rebate, rebate decreases with the increase in the purchase price:

1. New homes valued at up to $1 million will qualify for full 13 % rebate up to $130,000.
2. New home valued at and above $1.5 million will qualify for a maximum rebate of $130,000.00
3. New homes valued at and above $1.85 million will qualify for a reduced rebate of $24,000.00

Eligibility requirements for this new temporary rebate are:

1. Buyers who sign the purchase agreement between April 1, 2026, to March 31, 2027, will be eligible for this rebate.
2. All new homes that are used as a primary residence and as a residential rental property.
3. For new homes that will be used as a primary residence, construction must begin on or before December 3, 2028, and must be completed on or before December 31, 2031
4. For new homes that will be used as a rental property, construction must be completed one or before December 31, 2029.

New build homes are often topped with many additional costs which are over and above purchase price, like taxes, utility service charges, tree planting, driveway paving and development charges, and so on that increases the amount paid on closing to thousands of dollars. Of these, the major chunk is the payable HST rebate. This HST rebate incentive proposal comes at a time when the housing industry is struggling to survive. The purpose of this effort by the government is not only to ensure reduction in costs, but it will also increase affordable housing for home buyers, making it attainable. The intention of this proposal is also to increase sales aimed at housing development.

This is a proposal only and still needs a legislation pass. Thus, its outcome and its impact on home buyers and the housing trade is yet to be seen and analyzed accordingly.

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