Real Estate

New construction townhome GST/HST Question.

  • Last Updated:
  • Sep 15th, 2021 10:57 am
[OP]
Jr. Member
Jan 24, 2010
126 posts
3 upvotes
Toronto

New construction townhome GST/HST Question.

I was under impression the builder includes the HST of the new home, I would just need to pay the usual closing cost plus some adjustments (water / hydro connections / drive way paving) as extra.
But one of my RE friend says that I have to pay $24K (the HST rebate) or something along with the usual closing price...
Any idea ?
The second highlighted text is confusing.

I read the agreement below and that is why I kept it easy. (Sorry to make you read a time consuming text below, you can ignore it)

The agreement includes the following statements.

GST/HST:

a) Subject to Schedule “H” attached hereto the Vendor and Purchaser agree that the Purchase Price (but not
any adjustments, upgrades and/or extras on which the Purchaser agrees to pay GST/HST in accordance
with the relevant legislation) includes GST/HST payable in respect of this transactio
n
and the Vendor shall,
subject to Subparagraph 2.7(c) remit the GST/HST out of the Purchase Price on behalf of the Purchaser.
For the purposes of this Agreement “GST/HST” means the tax payable under Section 165 of the Excise Tax
Act (Canada) including the provincial component thereof payable under Subsection 165(2), if applicable.
The parties acknowledge that the provincial component of the GST/HST will apply to the within purchase
and sale if the Agreement is completed and both ownership and possession of the property is transferred
to the Purchaser after June 30, 2010.


The Purchaser agrees to pay as an adjustment on Closing the GST/HST eligible on any adjustments to the
Purchase Price credited to the Vendor on the Adjustments.

HST (Provincial and Federal portions) is included in purchase price. The purchase price has been determined taking into account the HST rebate (if applicable) to which the Purchaser is assigning to
the Vendor pursuant to compliance with Schedule “H” of the Agreement. The Purchaser shall reimburse the Vendor for any loss of this rebate by reason of the Purchaser’s default pursuant to
Schedule “H”.
Last edited by jay_jay on Sep 9th, 2021 12:40 pm, edited 1 time in total.
12 replies
Sr. Member
User avatar
Jul 30, 2013
688 posts
517 upvotes
GTA
Not sure what the $25K your friend is making reference to, maybe land transfer tax, development fees, and those other costs you listed?

Seems pretty clear that purchase price includes HST in the contract excerpt.
The HST rebate referenced is what you receive if you are planning to use it as your primary residence or will have a lease signed to rent out the unit (see below):
https://www.canada.ca/en/revenue-agency ... ebate.html
If you don't qualify for the rebate, you would have to pay that portion out of pocket.
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Deal Addict
Feb 19, 2019
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Stouffville ON
techkid wrote: Not sure what the $25K your friend is making reference to, maybe land transfer tax, development fees, and those other costs you listed?

Most likely a reference to $24K hst rebate.
Full Time and Full Service Realtor
Newbie
Nov 15, 2019
92 posts
36 upvotes
If you or a close relation (as defined in the legislation) do not move into the townhouse, then the builder will charge you an extra $24,000 in HST, This figure can change depending on the purchase price.

The builder probably also gives themselves the discretion to charge the extra $24,000, regardless of whether you or a close relation moves into the townhouse.

You would pay the extra $24,000 in HST, and then apply for the HST rebate. The rebate that you apply for depends on whether you live in the unit, or rent it out. There's a set of criteria that need to be met for the rebate.
[OP]
Jr. Member
Jan 24, 2010
126 posts
3 upvotes
Toronto
Indeed I originally bought it for my Daughter..
I hope she will be moving in there...
TorontoHSTRebates wrote: If you or a close relation (as defined in the legislation) do not move into the townhouse, then the builder will charge you an extra $24,000 in HST, This figure can change depending on the purchase price.

The builder probably also gives themselves the discretion to charge the extra $24,000, regardless of whether you or a close relation moves into the townhouse.

You would pay the extra $24,000 in HST, and then apply for the HST rebate. The rebate that you apply for depends on whether you live in the unit, or rent it out. There's a set of criteria that need to be met for the rebate.
Newbie
Jul 27, 2020
32 posts
19 upvotes
Ask your closing lawyer this but for us the builder advertised the homes price which includes the HST rebate , and from what I understand on closing you essentially assign that rebate to the builder, so they get that portion, and your left with what’s left after the maximum rebate is applied which I think is around a 450,000 home would get the maximum rebate without out of pocket additional hst expenses, so anything over that you have to pay the remaining hst on. Again, don’t quote me on this, and ask your closing lawyer.
[OP]
Jr. Member
Jan 24, 2010
126 posts
3 upvotes
Toronto
Is it something like, the HST rebate that you will be entitled will go to the builder. Provided you meet the conditions of the HST rebate.. If the HST rebate conditions are not met (no tenants, not occupying by buyer), you have to pay the HST back (to the builder or the CRA).. I am going to call the builder.
will5619 wrote: Ask your closing lawyer this but for us the builder advertised the homes price which includes the HST rebate , and from what I understand on closing you essentially assign that rebate to the builder, so they get that portion, and your left with what’s left after the maximum rebate is applied which I think is around a 450,000 home would get the maximum rebate without out of pocket additional hst expenses, so anything over that you have to pay the remaining hst on. Again, don’t quote me on this, and ask your closing lawyer.
[OP]
Jr. Member
Jan 24, 2010
126 posts
3 upvotes
Toronto
HST rebate details from a website
C92C9ADF-986F-4226-903C-0FF460B60206.jpeg
[OP]
Jr. Member
Jan 24, 2010
126 posts
3 upvotes
Toronto
So, if my daughter moves in, I am still eligible for HST rebate ?
jay_jay wrote: HST rebate details from a websiteC92C9ADF-986F-4226-903C-0FF460B60206.jpeg
Deal Addict
Jan 15, 2017
4333 posts
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Ottawa
When you state that you originally bought it for your daughter, is it your intention to gift it to her? If your daughter moves in will it be rent free? And how long will your daughter live there?
[OP]
Jr. Member
Jan 24, 2010
126 posts
3 upvotes
Toronto
Yepp rent frre until she stabilize ( finishing her school that year), then sell it and use the money for hrr life events such as buying house, wedding erc..,
skeet50 wrote: When you state that you originally bought it for your daughter, is it your intention to gift it to her? If your daughter moves in will it be rent free? And how long will your daughter live there?
Deal Addict
Jan 15, 2017
4333 posts
3916 upvotes
Ottawa
OP, you stated earlier that you hope that you daughter moves in and later state that if she does it would be for a short time to finish her school year and then you would sell the unit. Was your intention when you purchased the unit to simply flip it? If so, moving your daughter in for a short period of time will most likely not pass the smell test of the CRA.

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