Updated: April 2025  |  bremo.io financial guides

HST New Home Rebate in Ontario: How It Works

When you buy a new home or condo in Ontario, the purchase price is subject to 13% HST. This is a significant cost — on a $700,000 new home, that is $91,000 in HST. The HST New Home Rebate partially offsets this through federal and provincial programs. Understanding how it works determines whether you pay thousands more or less at closing.

Two Parts of the Ontario HST New Home Rebate

The rebate has two components:

1. Federal GST New Housing Rebate: Administered by CRA. Provides a rebate of 36% of the 5% federal GST on homes where the purchase price is under $350,000. Phases out between $350,000 and $450,000. No federal rebate applies for homes over $450,000.
2. Ontario New Residential Rental Property Rebate / New Home Rebate: Administered by Ontario. Provides a rebate of 75% of the Ontario provincial portion (8% PST) for homes where the purchase price is $400,000 or less. The provincial rebate does not phase out — homes over $400,000 are still eligible for a fixed maximum rebate of $24,000.

How Builders Handle the Rebate

Most Ontario new home builders present their prices as HST-included (with the rebate already applied). The advertised price already deducts the buyer's expected rebate. The builder then claims the rebate on your behalf from CRA.

This arrangement only works if:

• The home is your primary residence
• You or a qualifying family member intends to occupy the home

If you do not plan to occupy the home — if you are buying to rent it out — you cannot claim the rebate, and the builder will require you to pay the full HST. On a $600,000 unit, this difference is tens of thousands of dollars.

Investor Buyers and HST Exposure

Many pre-construction condo purchasers who intend to rent rather than occupy their units are surprised to learn they owe the full HST. Options for investors include:

• Registering for an HST number and claiming the rebate through the Rental Residential Property Rebate (different from the primary residence rebate, but can offset some cost)
• Ensuring the unit is leased immediately on occupancy and claiming the rental property rebate

This is complex tax territory. If you are buying new construction as an investment property, consult a tax accountant before signing — not after.

HST on Substantially Renovated Homes

HST also applies to homes that have been substantially renovated (generally more than 90% of the interior is stripped and rebuilt). Buyers of such homes may owe HST on the purchase price, and may be eligible for the same rebate programs. This is a less common situation but can arise when buying a fully gutted property.

Rebate Calculation Example

What You Need to Provide at Closing

If the builder is claiming the rebate on your behalf, you will need to sign a declaration confirming that you (or a qualifying family member) intend to occupy the home as a principal residence. If this declaration turns out to be false, CRA can demand repayment of the rebate with interest and penalties.

New Construction GST/HST Outside Ontario

Other provinces have different HST or GST structures:

• BC: 5% GST applies. Provincial rebates available for homes under certain thresholds.
• Alberta: 5% GST applies (no provincial component). Federal rebate applies on homes under $450,000.
• Quebec: GST (5%) + QST (9.975%) apply with separate rebate structures.