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  • Sep 18th, 2020 3:33 pm
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[OP]
Member
Jan 6, 2012
273 posts
79 upvotes

HST on new build

I am sure this subject has been brought up many times, but I just wanted to clarify...

For a brand new build, I know there is HST involved...i recently went to a sales office and to see about buying a new build, I expressed my concern about the price + HST as its already in the 660k range. His response is "no if the house is for you there is no HST added...HST is only added if you're going to resell it or rent it".

But my understanding is when I see the double sided accounting there is HST, so in this example the HST would be almost 80k, so if all the HST was included the net price of the house would be 580+ 80 to equal HST, but from new sale home agreements ive seen only part of the HST is included in the price and they still charge a portion to the buyer.

Is there any way I can have the sales agreement amended by my lawyer to specifically state that the price i'm purchasing is INCLUSIVE of hst costs so i dont have to pay a huge amount extra at closing. I've lived in my home for 10+ years and really wanting to go up in size, but if I have to pay 40-50k+ extra in Hst added to the home price (of his particular one im interested in), then i'll be priced out.

Any feedback would be helpful, thank you
26 replies
Newbie
Apr 25, 2017
89 posts
59 upvotes
For new builds most builders include HST in the sticker price i.e. the price you pay is inclusive of tax (and potential tax rebates). If the buyer decides to use the property as a rental then he/she has to pay HST at closing.
Newbie
Apr 9, 2020
31 posts
29 upvotes
sweetlady123 wrote: I am sure this subject has been brought up many times, but I just wanted to clarify...

For a brand new build, I know there is HST involved...i recently went to a sales office and to see about buying a new build, I expressed my concern about the price + HST as its already in the 660k range. His response is "no if the house is for you there is no HST added...HST is only added if you're going to resell it or rent it".

But my understanding is when I see the double sided accounting there is HST, so in this example the HST would be almost 80k, so if all the HST was included the net price of the house would be 580+ 80 to equal HST, but from new sale home agreements ive seen only part of the HST is included in the price and they still charge a portion to the buyer.

Is there any way I can have the sales agreement amended by my lawyer to specifically state that the price i'm purchasing is INCLUSIVE of hst costs so i dont have to pay a huge amount extra at closing. I've lived in my home for 10+ years and really wanting to go up in size, but if I have to pay 40-50k+ extra in Hst added to the home price (of his particular one im interested in), then i'll be priced out.

Any feedback would be helpful, thank you
The new build I bought always have "inclusion of HST " in the purchase agreement. maybe you can check the purchase.agreement first? I think you are over concerned.
Sr. Member
Feb 19, 2019
820 posts
886 upvotes
Stouffville ON
In a vast majority of cases the sticker price includes HST net of rebates.
If you are buying it as a principal residence in those cases there won’t be any change in price (for the purpose of this explanation I am ignoring developing fees and other charges).
In Ontario you are entitled to a $24K HST rebate, basically as part of the contract you are assigning the rebate from you to the builder so the CRA sends it directly to them.
If you are buying it as an investment it works different, if you meet all the criteria you will first pay the $24K to the builder, in essence the sticker price plus $24K, but than you can apply to get it refunded from cRA, net result is the same.
If buying for other purposes you will not get any rebate and you will pay $24K on top of the sticker price.
It’s NOT ALWAYS the case that the hst is included in the price, it is usually the case, never heard of a large subdivision builder doing it differently but to be sure you must read and understand the contract.
Full Time and Full Service Realtor
[OP]
Member
Jan 6, 2012
273 posts
79 upvotes
ZhaoW9051 wrote: The new build I bought always have "inclusion of HST " in the purchase agreement. maybe you can check the purchase.agreement first? I think you are over concerned.
No, I am not "overly concerned" I am asking a simple question, one that could cost me $10s of thousands of dollars I dont want to pay, even if that means I don't go forward and buy the home. thanks anyways.
Newbie
User avatar
Apr 5, 2017
97 posts
104 upvotes
The price from the builder is "adjusted" for HST which means that is the price you pay if you are eligible for all the HST rebates.

You receive the rebate if it is your principal home. If it is an investment property or purchased as an assignment, the builder will demand that you bring the amount equal to the rebate (usually $24,000) and apply for the rebate directly with the CRA.
Deal Addict
Jan 15, 2017
3437 posts
2782 upvotes
OP, what is your location? Different provinces have different rules and processes with regard to HST on new builds. In BC, for instance, new home prices are + HST. A $660k home is $660k + HST.
[OP]
Member
Jan 6, 2012
273 posts
79 upvotes
I think what I need to be doing as someone suggested to me in PM is that I ensure that the purchase price is "inclusive" of hst
Newbie
Aug 11, 2020
12 posts
2 upvotes
your lawyer should be able to read the purchase and sales agreement and confirm with you if this is clearly stated in the agreement, if it is not it is a negotiation point with the builder to make changes to the agreement
Member
Feb 7, 2018
229 posts
295 upvotes
Tagging onto this late. Looking at a new build condo to rent out 500k (Ontario).

I don’t understand the whole HST and rebate thing. HST is 13% so on 500k it would be an additional 65k on close + 20% DP. So 165k total on closing and then I apply to ON govt for the 65k back? Where does this 24k rebate come in? Do I pay 24k to builder and 41k to govt as part of that 65k? Or do I just pay 24k to builder and off the hook for the rest?

Sorry the responses to OPs question aren’t fully clear. And a full 65k at close on top of 20% DP is pretty insane IMO. If they just rebate the HST why charge it in the first place?
Sr. Member
Feb 19, 2019
820 posts
886 upvotes
Stouffville ON
wiab89 wrote: Tagging onto this late. Looking at a new build condo to rent out 500k (Ontario).

I don’t understand the whole HST and rebate thing. HST is 13% so on 500k it would be an additional 65k on close + 20% DP. So 165k total on closing and then I apply to ON govt for the 65k back? Where does this 24k rebate come in? Do I pay 24k to builder and 41k to govt as part of that 65k? Or do I just pay 24k to builder and off the hook for the rest?

Sorry the responses to OPs question aren’t fully clear. And a full 65k at close on top of 20% DP is pretty insane IMO. If they just rebate the HST why charge it in the first place?
In a typical scenario if the price from the builder is $500K it already includes HST and HST rebate. If this is your principal residence than this is what you pay and you don't have to worry about any hst.
If this is a rental property you will need to pay $24K to the builder (so total $524K), and if you meet all the criteria you can apply for the $24K rebate from CRA.
This applies to ON, don't know about other provinces. The rebate on the federal portion of the HST is only for housing up to $450K (or there about), therefore most units don't qualify, Ontario doesn't have a cap like this that's why you are getting the rebate for the provincial part of the HST.
Full Time and Full Service Realtor
Member
Sep 11, 2017
266 posts
173 upvotes
senasena wrote: In a typical scenario if the price from the builder is $500K it already includes HST and HST rebate. If this is your principal residence than this is what you pay and you don't have to worry about any hst.
If this is a rental property you will need to pay $24K to the builder (so total $524K), and if you meet all the criteria you can apply for the $24K rebate from CRA.
This applies to ON, don't know about other provinces. The rebate on the federal portion of the HST is only for housing up to $450K (or there about), therefore most units don't qualify, Ontario doesn't have a cap like this that's why you are getting the rebate for the provincial part of the HST.
I was under the impression that in Ontario, HST rebate on investment properties is a sliding scale meaning that once your property hits $450k purchase price or over, the MAX rebate you can get is $24k however you would pay greater then $24k in hst on closing. The lower your purchase price is below $450k the greater hst rebate you would receive (as an investor). As a result, for investment properties >$450k in Ontario, you do pay more in hst on closing then you receive as a rebate. If I'm mistaken please advise...
Newbie
Sep 29, 2013
45 posts
30 upvotes
FedExpress wrote: I was under the impression that in Ontario, HST rebate on investment properties is a sliding scale meaning that once your property hits $450k purchase price or over, the MAX rebate you can get is $24k however you would pay greater then $24k in hst on closing. The lower your purchase price is below $450k the greater hst rebate you would receive (as an investor). As a result, for investment properties >$450k in Ontario, you do pay more in hst on closing then you receive as a rebate. If I'm mistaken please advise...
From memory I think you are right. I will be going through this in May when I take possession of a rental property. At the time I purchased (June) I did my research and I should get pretty much all of it back. My lawyer said there are accounting firms who make a business out of this because the form to fill out is complex. I may have to reach out to these guys in the link below.

https://www.rebate4u.ca/rebate-blog/do- ... ty-canada/


Also don't even think of selling any new build before 1 year. I think I read that CRA can claw back any rebate they give you!
Sr. Member
Feb 19, 2019
820 posts
886 upvotes
Stouffville ON
FedExpress wrote: I was under the impression that in Ontario, HST rebate on investment properties is a sliding scale meaning that once your property hits $450k purchase price or over, the MAX rebate you can get is $24k however you would pay greater then $24k in hst on closing. The lower your purchase price is below $450k the greater hst rebate you would receive (as an investor). As a result, for investment properties >$450k in Ontario, you do pay more in hst on closing then you receive as a rebate. If I'm mistaken please advise...
Yes, but this has to do with the federal portion of the hst. I don't remember the exact numbers since quite frankly the majority of the properties around GTA are over $450K. The max combined federal and provincial HST rebate would be around $30K (6K federal and $24K provincial), the Ontario portion doesn't change (once the 8% provincial part is reached, which is in pretty much every case in GTA), but for the federal the higher the house price the lower the rebate, and it gets completely eliminated at the $450K mark (or around).
Full Time and Full Service Realtor
Newbie
Sep 29, 2013
45 posts
30 upvotes
Just spoke to someone from this website and they have dealt with my builder in Ottawa before.
He said it works like this:

1. Whether it was rental or primary residence, the max the builder can get from the govt is 24k. The sliding scale is only used for houses under 450K where if your house costs 35K, ~21k comes from provincial and 4k comes from a federal program.
2. The builder will ask me to hand over a cheque for 24k. My purchase is over 450k
3. I apply for the rebate after I have a lease in place and wait for a CRA cheque for 6-8weeks.

Notes:
- First person to live in the property must be a tenant
- you can't change it from a rental to primary residence for 1 year
- cost for his service is ~450

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