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[OP]
Sr. Member
Jul 22, 2015
557 posts
166 upvotes
Ontario

HST on New Build

If you've recently purchased a brand new build for $600,000+ as your principle residence, did you pay any HST on closing?
28 replies
Member
Jul 31, 2007
303 posts
11 upvotes
Scarborough
No HST is included in the purchase price normally.
Newbie
User avatar
Apr 5, 2017
91 posts
102 upvotes
This is a common misconception.

Lets say you purchased a house for $600,000 total from a builder, it is "adjusted" for HST. You assign the HST rebate for approximately $24,000.00 in this case to the builder. The actual purchase price is $624,000 but the effective purchase price after the HST assignment is $600,000.

Look at the statement of adjustments, they would show the sale price then two lines for different portions of the tax (Ontario/Federal) and then the rebate that was given to you.
Deal Addict
User avatar
Mar 14, 2006
4329 posts
552 upvotes
in essence, HST (13%) is built into the purchase price. the purchase price is inclusive of HST Rebate. If you are not claiming it as principal then you have to pay 24k extra to purchase price at closing. You are able to get up to 24k rebate afterwards if you lease it out for 1yr with agreement.
[OP]
Sr. Member
Jul 22, 2015
557 posts
166 upvotes
Ontario
lawbooth wrote: This is a common misconception.

Lets say you purchased a house for $600,000 total from a builder, it is "adjusted" for HST. You assign the HST rebate for approximately $24,000.00 in this case to the builder. The actual purchase price is $624,000 but the effective purchase price after the HST assignment is $600,000.

Look at the statement of adjustments, they would show the sale price then two lines for different portions of the tax (Ontario/Federal) and then the rebate that was given to you.
I won't be getting the statement of adjustments until closing which is 1 month away. I've read that there is a cap on the provincial HST which is $24,000. My concern is that I may have some HST to pay out of pocket which I haven't budgeted for.
Deal Addict
User avatar
Mar 14, 2006
4329 posts
552 upvotes
you pay your lawyer up to $1500-2000 for buying for a reason, why not ask them to read your agreement.
Deal Addict
User avatar
Dec 21, 2013
1395 posts
1386 upvotes
GTA
lawbooth wrote: This is a common misconception.

Lets say you purchased a house for $600,000 total from a builder, it is "adjusted" for HST. You assign the HST rebate for approximately $24,000.00 in this case to the builder. The actual purchase price is $624,000 but the effective purchase price after the HST assignment is $600,000.

Look at the statement of adjustments, they would show the sale price then two lines for different portions of the tax (Ontario/Federal) and then the rebate that was given to you.
Can confirm; This is 100% accurate
[OP]
Sr. Member
Jul 22, 2015
557 posts
166 upvotes
Ontario
mingyang wrote: you pay your lawyer up to $1500-2000 for buying for a reason, why not ask them to read your agreement.
I completely agree, however, I've asked my lawyer and received a generic response. Basically said that the max is $24,000 for provincial HST but can't tell me if i'm paying anything out of pocket :(
Deal Expert
User avatar
Jul 30, 2007
26064 posts
11139 upvotes
Toronto
Most of the builders in Ontario will sell their new builds with HST & Rebate included. Hence, for $600,000 inclusive then the price is broken down as:

A - ($600,000 + $24,000) / 1.13 = $552,212.40 (real purchase price)

B- HST Housing rebate = ($24,000) max. You get this and the SOA shows this as a credit. In turn, you assign this credit over to builder so they can claim for you.

C - HST taxes = $552,212.40 *.13 = $71,787.60

A - B + C = $600,000 selling price

Suppose the new build is not going to be used as your primary residence, instead it's for other purposes. Then you will not be entitled to the rebate of $24,000. Meaning, on the SOA, there will be no credit for you on this and you are essentially would be out by such.
Sr. Member
May 18, 2011
530 posts
72 upvotes
NORTH YORK
You can also get a rebate if it is being rented out by providing the CRA with a copy of a 1 year lease. You just have to pay it first at close and get it back after. 99% of people including many Realtors are pretty sketch on HST rules... If you lie to the CRA and they find out the fines can be pretty big....
[OP]
Sr. Member
Jul 22, 2015
557 posts
166 upvotes
Ontario
booblehead wrote: Most of the builders in Ontario will sell their new builds with HST & Rebate included. Hence, for $600,000 inclusive then the price is broken down as:

A - ($600,000 + $24,000) / 1.13 = $552,212.40 (real purchase price)

B- HST Housing rebate = ($24,000) max. You get this and the SOA shows this as a credit. In turn, you assign this credit over to builder so they can claim for you.

C - HST taxes = $552,212.40 *.13 = $71,787.60

A - B + C = $600,000 selling price

Suppose the new build is not going to be used as your primary residence, instead it's for other purposes. Then you will not be entitled to the rebate of $24,000. Meaning, on the SOA, there will be no credit for you on this and you are essentially would be out by such.
Thanks for the breakdown. This certainly helps! Much more informative than my lawyer!
Deal Fanatic
Feb 22, 2011
6699 posts
6789 upvotes
Toronto
Love2Snack wrote: You are entitled to the rebate as a landlord.... you just have to fork out the money first and then apply for the rebate with a copy of the lease... There are limits, etc...

https://www.canada.ca/en/revenue-agency ... ebate.html
Do you know if when you purchase it you have to pay the HST cash up front? Or can you include it in the mortgage.
Deal Expert
User avatar
Jul 30, 2007
26064 posts
11139 upvotes
Toronto
In Ontario, most builders would have included HST & rebate into the purchase price, meaning, if you don't qualify for the rebate part, then you will not be credited to you on the SOA, hence, your due on closing to builder on closing will be higher (by the amount you did not get credit for the rebate amount). The amount of finance would be subject to review by your mortgage company.
Deal Fanatic
Jul 3, 2011
5636 posts
2818 upvotes
Thornhill
Acheewawa wrote: If you've recently purchased a brand new build for $600,000+ as your principle residence, did you pay any HST on closing?
If you mean will there be an hst payable on other items, the answer is yes.

All fees and services extras that are not explicitly accounted for in the purchase price and are shown as an adjustment for example, Tarion warranty, will be adjusted for hst on closing. Upgrades not paid for prior to closing will be subject to HST. There can be a host of items all of which should be stated in the disclosures of the purchase agreement - some are taxable some are not.

Then of course there is hst on the legal fees, mortgage fees and such.

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