It’s tax season in Canada – one of the most stressful times of the year, to be sure. There’s a mountain of paperwork to be filed, and if you have just purchased a home, that pile may look decidedly Himalayan.
While not a task many relish, tackling those taxes –and filing for various buyer and homeowner rebates – can bring significant rewards. One such example is the Ontario HST rebate for new homes. Brought in by the provincial government shortly after it harmonized its sales tax in 2010, the measure seeks to ease the considerable financial strain of home ownership. It means new homeowners can receive up to $30,000 back from the federal and provincial governments – a sum that is certainly worth the hassle of gathering those extra receipts.
Who Else Qualifies for a Renovation Rebate?
The reimbursement also applies to those who have made a substantial renovation, major addition or conversion to their home, a proviso that many homeowners are unaware of according to tax expert Mark Purdy.
As the proprietor of HST Rebate New Homes, it is Purdy’s job to explain this refund to his clients. There are a number of factors that determine your eventual home renovation rebate, as he explains.
“There are two levels – the federal and the provincial program,” he says. “Under the federal program, the maximum you can get back is $6,300. That’s for homes below a fair market value of $450,000, so in the GTA almost nobody is doing a renovation and getting federal money back.”
Provincial Renovation Rebate Requirements
With the average price of a Toronto home now $859,186, the majority of people carrying out substantial renovation work will therefore be seeking the provincial rebate, which can vary.
“On the provincial program, the first question is: did you buy vacant land?” Purdy says. “If you did, you can get as much as $24,000 back from the provincial government. The second side is for people that just renovated their existing house, or if you ripped down a house and built a new one, then you can get a maximum of $16,080.”
Vacant land in Toronto is somewhat akin to hen’s teeth, so doing work on an existing structure is much more common when it comes to this rebate. Also to consider is the fact that when the government mean substantial, they really mean substantial, as Purdy outlines.
“It means 90% of the inside of the house needs to be renovated. When you make the application, you describe the size of the land, how many rooms, what you did – new ceilings, floors, appliances. They will look at that and decide if it sounds like 90%.”
Different Markets Mean Different Home Renovation Rebates
Currently, Toronto’s housing market is an anomaly compared to the rest of Canada, and each province has its own sales tax and rebate rules. In Ontario, the 13% HST is 5% federal and 8% provincial. While the price of homes pretty much rules out homeowners in the GTA for a federal rebate, that isn’t the case in the rest of the province.
“If you buy a piece of vacant land in Kingston for example, then spend $400,000 to build a home,” says Purdy. “That’s under the $450,000 cut-off so you will be eligible for $6,400 federal rebate and $24,000 provincial.”