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How To Calculate HST On New Homes In Ontario

HST Rebate on New Homes Ontario Calculator

Before you start calculating HST rebate on your new home, it is important to understand that the Provincial component of the HST rebate is fixed at 6% to a maximum of $24,000, the federal portion of the HST rebate is on a sliding scale, reducing to zero once the builder’s base price or “consideration” exceeds $450,000.

You may be qualified to claim a tax rebate for a portion of the HST you paid on the purchase price of a newly built home or the cost of building your house if:

  • You buy a new home including the land from a home builder;
  • You construct or substantially renovate your home, or carry out a major addition or hire another person to do so;
  • You buy a new mobile home or a floating home from a builder or vendor;
  • You buy a share of capital stock of a co-operative housing corporation;
  • Your home is destroyed in a fire and is consequently rebuilt.

The following are the examples of How To Calculate HST On New Homes In Ontario

Using the Builder’s List Prices as a starting point, and particular CRA formula’s for each of the four value bands (being <$368,200, $368,200 to $424,850, $424,850 to $484,500, and >$484,500) it is possible to calculate how much HST is already included in the purchase price and what the federal and provincial HST rebate components will be.

However, these formulas can only be used if all of the following conditions are met:

  • the purchaser is buying a newly constructed or substantially renovated single unit residential complex or residential condominium unit from a builder, together with the related land;
  • the housing is situated in Ontario;
  • HST at 13% applies to the sale;
  • the purchaser meets the conditions for claiming the Ontario new housing rebate; the builder pays or credits the Ontario new housing rebate and, where applicable, the GST/HST new housing rebate in respect of the federal part of the HST to the purchaser; and
  • the builder and the buyer have agreed to a stated price net of the Ontario new housing rebate and, where applicable, the GST/HST new housing rebate in respect of the federal part of the HST.

To calculate the additional HST payable upon close for an investment property, refer to the formulas and examples below.

  • New home buyers can apply for a 36% rebate of the federal portion of HST applicable to the purchase price to a maximum of $6,300 for homes costing $350,000 or less.
  • New homes priced between $350,000 and $450,000, the rebate on the federal share of the HST rebate would be decreased proportionally.
  • New homes priced $450,000 or higher would not receive a rebate of the federal portion of the HST.
  • New home buyers can apply for a 75% rebate of the provincial portion of the HST applicable to the buying price to a maximum of $24,000.

Formula #1 for Properties Priced Under $368,200

Provided the Builder’s List Price or “Stated Price Net of Rebates (SPNR)” is not more that $368,200 (meaning that the consideration (i.e. builder’s purchase price) is not more than $350,000):

Base Price / Consideration = SPNR ÷ 1.052

Example 1

The stated builder’s list price net of rebates is $325,000, and all of the above conditions are satisfied. The “consideration” or builder’s base price would be calculated as:

Builder’s base price = builder’s list price ÷ 1.052 = $325,000 ÷ 1.052 = $308,935.36 (indicating that $16,064.64 in HST is already included in the builder’s list price)

Once the Builder’s base price is determined the tax payable and the new housing rebates may be calculated.

Total HST payable = builder’s base price x 13% = $308,935.36 × 13% = $40,161.60

Less GST/HST new housing rebate in respect of the federal part of the HST = (builder’s base price x 5%) x 36% = ($308,935.36 × 5%) x 36% = $5,560.84

Less Ontario new housing rebate in respect of the provincial part of the HST = (builder’s base price x 8%) x 75% = ($308,935.36 × 8%) × 75% = $18,536.12

For an investor, on closing they would be required to remit the $24,096.96 in additional HST and then apply for the rebate of that HST amount, a process which typically takes about 6 to 8 weeks and requires that the property be leased to a tenant for a minimum of one year.

Formula #2 for Properties Priced Between $368,200 and $424,850

If the Builder’s list price is more than $368,200 but not more than $424,850 (meaning that the base price is more than $350,000 but not more than $400,000), then:

The base price = (List price + $28,350) ÷ 1.133

Example 2

The stated price net of rebates is $410,000, and all of the above conditions are satisfied. The builder’s base price would be calculated as:

Builder’s base price = ($410,000 + $28,350) ÷ 1.133 = $386,893.20 (indicating that $23,106.80 in HST is already included in the builder’s list price)

Once the consideration is determined the tax payable and the new housing rebates may be calculated.

Total HST payable = $386,893.20 × 13% = $50,296.12

GST/HST new housing rebate in respect of the federal part of the HST = $6,300 × [($450,000 – $386,893.20)] ÷ $100,000 = $3,975.73

Ontario new housing rebate in respect of the provincial part of the HST = ($386,893.20 × 8%) × 75% = $23,213.59

Formula #3 for Properties Priced Between $424,850 and $484,500

If the Builder’s list price is more than is more than $424,850 and not more than $484,500 (meaning that the base price is more than $400,000 but not more than $450,000):

The base price = (Builder’s List price + $52,350) ÷ 1.193

Example 3

The stated price net of rebates is $460,000 and all of the above conditions are satisfied. The builder’s base price would be calculated as:

Builder’s base price = ($460,000 + $52,350) ÷ 1.193 = $429,463.54 (indicating that $30,536.46 in HST is already included in the builder’s list price)

Once the consideration is determined the tax payable and the new housing rebates may be calculated.

Total HST payable = $429,463.54 × 13% = $55,830.26

GST/HST new housing rebate in respect of the federal part of the HST = $6,300 × [($450,000 – $429,463.54)] ÷ $100,000 = $1,293.80

Ontario new housing rebate in respect of the provincial part of the HST = ($429,463.54 × 8%) × 75% = $24,000 (maximum provincial rebate)

Formula #4 for Properties Priced Over $484,500

If the Builder’s list price is more than is more than $484,500 (meaning that the base price is more than $450,000):

Builder’s base price = (Builder’s List price + $24,000) ÷ 1.13

Note: there is no rebate of the Federal proportion of the HST for houses, priced above $484,500.

Example 4

The stated price net of rebates is $700,000 and all of the above conditions are satisfied. . The builder’s base price would be calculated as:

Builder’s base price = ($700,000 + $24,000) ÷ 1.13 = $640,707.96 (indicating that $59,292.04 in HST is already included in the builder’s list price)

Once the consideration is determined the tax payable and the new housing rebates may be calculated.

Total HST payable = $640,707.96 × 13% = $83,292.03

GST/HST new housing rebate in respect of the federal part of the HST = $6,300 × [($450,000 – $640,707.96)] ÷ $100,000 = $0

Ontario new housing rebate = ($640,707.96 × 8%) × 75% = $24,000 (maximum provincial rebate)

 Ontario HST Rebate Calculator
HST Rebate Calculator

The article “How To Calculate HST On New Homes In Ontario”  is not a legal advice.

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