New home buyers and owners renovating their own homes continue to be confused about the GST/HST rebate. There are different rules when you are moving into the home as your primary residence, when you are renovating an existing home, or whether you intend to rent your new home as an investment property.
When you buy a new home or condominium and plan to make it your primary residence, the rebate is usually included in the price. So if you paid $400,000, the real price including the tax is closer to $427,000.
In your agreement with the builder, you likely agreed to transfer your rebate to him, bringing your price down to $400,000. If you do not move in on closing, you will have to pay the full amount.
If you decide to rent out your new home, you are still eligible for the HST rebate, under a different program, called the HST new rental residential rebate.
If you substantially renovated your own home and paid the contractors yourself, you may also be entitled to up to $16,000 in HST rebates. In all cases, you have up to two years from closing your new home or completing your renovations to apply.
Figuring out what to do can be tough, says Michael Beallor of Rebate4U, www.rebate4u.com a company that has helps homeowners collect the HST rebate.
He says it can be difficult for the average person to find their way through the Canada Revenue Agency and deliver the documents to support any claim for the HST rebate. Beallor says he’s helped owners get $6 million in tax rebates. The company does not charge a fee up front, but collects when the rebate is paid. Another company that provide the same service is Custom Business Solutions at www.rentalrebate.ca. In addition, lawyers and accountants also provide this service to their clients, as I do in my own law practice.
Some buyers intend to move in when they buy a condominium, but when it is ready years later, their circumstances have changed and so they sell. In these cases, the CRA typically says the buyers are no longer entitled to the HST rebate.
But there is a way to fight that, says Toronto author and tax lawyer David Sherman.
Sherman says if you can show that you intended to make the house or condo your primary residence, but that circumstances changed, requiring you to sell, then you may be able to fight a reassessment. You may have been relocated for work, there may have been a death in the family, or a child may have intended to use the unit for university but then was accepted to a university out of town. What is very important is that you have the right documents to support your claim when dealing with the Canada Revenue Agency. You may need advice from a lawyer or accountant.
Speaking of rebates, my column of Feb. 28 was in part about first-time buyer rebates related to the Ontario Land Transfer Tax. Scott Blodgett with the Ministry of Finance, clarified an example used in the column which referred to a situation where a couple marry and buy a house.
One spouse has already claimed the rebate but sold the home before they got married and one has never owned a house. Blodgett says the spouse who has never owned a home can still claim 100 per cent of the land transfer tax rebate, even if they do not take 100 per cent ownership of the property.
This also applies to the Toronto Land transfer Tax rebate.
If anyone has overpaid land transfer taxes, you have eighteen months to apply to the Ministry of Finance for an overpayment. Be prepared when applying for any tax rebate.
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About Mark Weisleder
Mark is a lawyer, author, instructor, Toronto Star columnist and keynote speaker for the real estate industry.