What you need to know about the GST rebate on new homes
The government offers a special rebate on the tax paid on new homes. This is an advantage that is accessible to you as a new home buyer.
What is it?
The GST New Home Rebate is a type of refund given for the tax paid on a new home and property. In Canada, sales tax is applied on all consumer goods but usually applied at the point of purchase. In contrast, most homes include GST and thus the buyer does not have to pay additional tax at the point of sale. To offer competitive pricing, builders apply a GST rebate to this final price, outlining the details at the point of sale. While you have the option of completing the application process yourself, having your builder apply the rebate at the point of sale simplifies and further streamlines the process. Note that most builders typically factor in the GST rebate when offering their competitive pricing. Nonetheless, ensure that you ask your builder about it when purchasing a home.
How it works
The price on house listings include GST, and most builders apply the tax in addition to the tax rebate in order to offer competitive pricing. This rebate is designed for homes that become the residence of the buyer. The rebate itself is a rebate of 36% of the GST paid on their home if their home is under $350K. It translates to 1.744% of the value of the home. The percentage of the rebate for homes priced between $350,000 and $450,000 slowly decreases and at $450K a rebate is no longer factored.
Procedure
While it is possible for clients to take care of their own rebate application, it is recommended that the rebate is assigned to the builder as the builder is familiar with the materials and construction procedures that are eligible for the rebate. Assigning the rebate to the builder is preferable because then the home buyer does not need to apply, calculate and submit the forms themselves. The contract clearly states the purchase price net of the rebate. An exception to assigning the rebate to the builder may include plans to rent out a portion of your home. You can ask your builder about this specification; notably, to what extent rental properties fall within the framework of a builder-assigned rebate.
We recognize that purchasing a new home can feel like a daunting endeavour, particularly for first time buyers. As a result we seek to offer you competitive prices and see about the applicable discounts that you qualify for. Our homes are designed to be affordable, practical and conducive to family living.