Canada’s HST (Harmonized Sales Tax) on Real Estate PurchasesOntario’s HST on Real Estate Purchases Explained

In Ontario newly constructed homes and condominiums (and homes that have been substantially renovated and put on the market for sale) are subject to an HST (Harmonized Sales Tax) rate of 13% on top of the sale price; resale homes are not charged HST.

The HST is the combined tax rate of the Ontario provincial sales tax (8%) and Canada’s federal Goods and Services Tax (5%).

 

Ontario’s HST Housing Rebate

In order to qualify for an HST rebate on your home purchase you need to meet the following conditions:

  • The home is located in Ontario
  • The home is new or has been substantially renovated
  • The home’s purchase price is under $450,000 (to be eligible for the federal GST rebate)
  • The home will be used as your primary residence

Additional conditions to qualify for the HST rebate may apply.

 

How much is the HST Housing Rebate?

The calculation of the HST rebate amount is based on the federal and provincial tax rates and the HST rebate for the federal tax portion and the Ontario provincial sales tax portion of the HST is calculated as follows (*January 1, 2016):

  • 5% GST on the purchase price of the home (plus the purchase price of a taxable assignment, if applicable) when the home is purchased under $450,000
  • 6% of the Ontario PST (Provincial Sales Tax) rate that is charged up the first $400,000 of the purchase price can be eligible for the Ontario housing rebate

Example: You purchase a new home for $400,000 and the total payable HST is $52,000 (PST $32,000 + HST $20,000 = $52,000). You are eligible for federal GST rebate of $20,000 and the Ontario provincial housing rebate of $24,000 (6% of the 8% PST on the purchase price up to $450,000 is eligible for the rebate). Your total HST rebate is $44,000.

In Canada the home must be priced under $450,000 to receive the federal housing rebate, if the purchase price is $450,001 or higher then you are not eligible for any rebate.

In Ontario the sales tax payable on new homes is 8% and you can receive a rebate equal to 6% on the first $400,000 of the purchase price. You will still pay 2% sales tax on the first $400,000 and 8% on any amount over $400,000. It’s important to know that the maximum amount of the rebate is $24,000.

Canada Revenue Agency GST/HST New Housing Rebate forms are here.

Your experienced real estate sales representative can advise you on the status of HST payable on your property purchase and it’s is advisable that you also obtain professional tax advice when applying for HST housing rebates.