After transitioning from goods and services tax to harmonized sales tax on July 1, 2010, both the federal and provincial governments instituted GST/HST tax rebate programs for homeowners. With the HST rate in Ontario now 13 percent, these programs offer much-need tax relief to qualifying homeowners.
The programs primarily target new homeowners who purchase houses, but they also apply to existing homeowners who pay for significant renovations on their existing homes. If you’ve had significant renovations done to your home in the past two years, you may be able to claim rebates worth up to $36,300.
In order to qualify for the GST/HST, new housing rebate offered by the federal government and/or Ontario, a home renovation project must meet multiple criteria.
First, the house itself has to be within the program’s parameters. Most types of housing units qualify, including single-family homes, duplexes, townhomes, condominiums, co-operative living units, mobile homes, modular homes and floating homes. Bed and breakfasts also qualify if at least half of the structure is used as the host’s home.
Second, the house must be the primary residence of an individual or family. Most often this is the owner or a close family member of theirs, but transitional housing and rental properties may qualify in certain situations.
Third, the house must be owned by an individual. Partnerships and corporations can’t apply for or receive the rebate. Thus, many landlords don’t request this rebate (although they might still claim HST or GST on renovating a house as a business expense).
Fourth, all parties signed onto a renovation loan must meet the program’s requirements in order to obtain the rebate. A case in 2018 determined that homeowners can’t claim the federal rebate if a cosigner fails to satisfy the rebate conditions. This is true even if the cosigner is only a bare trustee in the arrangement.
While most single-family homeowners own the land that their house is on, not all do. In the event that an owned home is located on leased land, homeowners can still apply for the rebate as long as the duration of the lease is 20 years or more. This may be an especially important consideration for people who have condominium units, co-operative units or mobile homes.
No rebate is available for renovating a second home or vacation property. The program applies to primary residences only.
In order to get the rebate for GST on renovating a home, the renovation must be “significant.” It may qualify in either of two ways.
Renovations and remodeling projects that remove or replace at least 90 percent of the interior qualify for the GST/HST New Housing Rebate. Even though these renovations aren’t themselves technically new housing, they’re essentially making the interior of the house all-new on the inside and qualify for those reasons.
Alternatively, renovations that make a large addition to a home’s living space also qualify. The renovations must at least double the living space of the home to count, but no changes need to be made to the existing interior.
There are both federal and provincial programs available to homeowners who have renovation projects which qualify for the GST/HST New Housing Rebate. Together, the programs make up to $36,300 available if homeowners have spent that much GST on renovating a house.
At the time of writing, the federal government offered a rebate of up to $6,300 for qualifying projects. The limit is phased out for high-value properties. Decreases begin at the $350,000 property value mark, and the program is entirely phased out for properties worth more than $450,000. Of course, the actual amount refunded can’t exceed the GST paid on a renovation project.
While certainly appreciated by homeowners, this refund hardly covers the full HST or GST spent on most qualifying home renovations. Renovations of this size can be quite expensive and come with tax bills that are much higher than $6,300.
Ontario itself offers a much larger rebate, allowing homeowners with qualifying renovations to receive up to $30,000 back on HST and GST they spend while making a renovation. This is much more in line with the taxes that many homeowners spend on renovations of this extent.
The provincial program is patterned directly after the federal one, and program requirements are mostly the same as the federal requirements but there is no dollar on the value of the property eligible for the rebate. Naturally, the Ontario refund is only available when renovating a home that’s in Ontario.
(British Columbia also has a provincial rebate program, but it’s not quite as generous as what Ontario offers.)
In order to receive the rebate, all documents must be submitted within two years of a qualifying renovation project’s completion. The exact documents that must be submitted when claiming GST on a home renovation project are slightly from the forms that must be sent in for a new home purchase.
Also, all relevant documentation should be kept for a period of six years after submitting the rebate request forms. Relevant documentation includes all receipts and paid invoices, as well as any other documents that could help prove the renovation work was done. Originals should be kept instead of copies whenever possible, and the retained documents should be stored in a secure place.
If you’ve already paid GST on renovating a house or have a qualifying renovation planned, contact an attorney who’s familiar with the HST/GST New Housing Rebate program for help filing a claim. An attorney who’s familiar with the program and related litigation will be able to determine whether your renovation qualifies and collect the necessary documentation assuming it does. They can help you file a claim and get back what you’re allowed under both the federal and provincial programs.
Nathaniel completed his Juris Doctor degree at Osgoode Hall Law School and is our senior associate. He articled with us in 2014 and was called to the bar in 2015. He successfully completed all of the requirements of Osgoode’s Taxation Law Curricular Stream
Kevin earned his Juris Doctor from Osgoode Hall Law School and became an articling student in 2017. He has been with us as a tax lawyer since his call to the bar in 2018.
Ian Thomas joined our Toronto tax law firm as an articling student (student at law) in July 2016 and stayed with us upon becoming a Canadian tax lawyer in June 2017. Ian earned his Juris Doctor from Osgoode Hall Law School and graduated in 2016.
Ildi has joined the law firm of Rotfleisch & Samulovitch PC in June, 2000 and brings over 25 years of legal secretarial experience to the firm. She started as a Legal Secretary and after obtaining Certificates from The Institute of Law Clerks of Ontario
Jason earned his undergraduate degree at Wilfrid Laurier University with a History and Classics Double Major with an English Minor and joined our team as a paralegal in 2018.
Denise is our first responder who cheerfully answers the phones and generally interfaces with clients. She has been with us since 2016.
Paul Zhang was a summer student with us in 2018 and joins us as an articling student in 2019.
Jamin Chen joined our tax law firm as an articling student in September 2016 after earning his Juris Doctor from Allard Hall at the University of British Columbia and continued to practice tax law with us after his call to the bar in 2017.