For most people, purchasing their first home is an exciting milestone, but it can also be quite financially overwhelming. In addition to the down payment, homebuyers are often faced with a wide variety of taxes and fees associated with the process. What many homebuyers may not realize is that the Government of Canada offers a GST/HST New Housing Rebate that may help reduce costs for eligible purchasers.
This rebate makes the buying process more affordable for individuals navigating the purchase of their first home.
What Is the First-Time Homebuyers’ Tax Rebate?
GST/HST New Housing Rebate is a federal tax exemption that may eliminate some of the GST or HST for eligible first-time homebuyers. The rebate could recover up to 100% of the GST, or the federal portion of the HST that the buyer paid. The amount of the rebate depends on the circumstances and the purchase price of the property.
To qualify for the rebate, the home must be new or substantially renovated at the time of purchase, either by the homeowner or a builder.
Who Is Eligible?
The first-time homeowner rebate is not available to every homebuyer. There are several eligibility criteria that must be met before the rebate can be applied.
These requirements state that the first-time homebuyer:
- Must be at least 18 years of age
- Must be a Canadian citizen or permanent resident
- Must not have lived in a home that was owned with a spouse or common-law partner (in or outside of Canada) as your primary residence in the past four calendar years
- Neither they nor their spouse/ common-law partner has previously received a FTHB rebate
Eligibility may also depend on how the property was acquired and whether it will be used as a primary residence.
To qualify, the homebuyer must have:
- Purchased a new build or a recently renovated home from a builder on leased land with a lease of at least 20 years to be used as your primary residence
- Constructed, renovated, or hired someone to build/renovate a home to be used as your primary residence
- Purchased a share in a co-op for the purpose of using it as your primary residence
Before applying, first-time homebuyers should ensure that they meet the requirements to ensure that they will be able to recover the rebate.
There are other criteria that must also be met in order to qualify. These can be found on the Government of Canada website.
How To Apply?
The application process may vary depending on whether the applicant purchased the home from a builder or built it themselves.
If the home was purchased from a builder, the applicant must review the application types as listed on the Government of Canada website. Each application has its own document requirements and submission deadlines that must be met. When purchasing a home from a builder, it is not guaranteed that the rebate will be credited to the homebuyer, so it is important to read the applications carefully.
If the home was built by the applicant, the applicant has two years from the date of possession to apply for the rebate. In this case, the buyer should submit an application directly to the Canada Revenue Agency (CRA). As eligibility requirements and deadlines may vary, buyers should carefully review the criteria before applying.
While this process may seem overwhelming, it does not have to be. Speaking with a real estate lawyer can help you determine whether you are eligible for the first-time homeowner rebate and help you to understand your next steps.