GST rebates available for some new home buyers

The pre-construction condo craze has a hidden benefit, as there could be thousands of dollars hidden in your sales contract. You have to pay GST on homes that have not had a previous owner, but the federal government gives some of that money back.

When you take possession of your newly-built home, you’re eligible for the aptly-named new housing rebate on GST. It applies to new condos, new mobile or floating homes, and substantially renovated homes, but Bradley Alvarez with the Canada Revenue Agency says there is a cutoff. “The fair market value of the land and the building when completed must be less than $450,000.” There is a separate rebate for the GST paid on a new property you intend to rent out.

The GST rate has also been cut over the past two years, first from 7% to 6%, and now to 5%, which has a big impact on all of these pre-construction contracts. When you get the home, you’ll have to pay the old GST rate, but you or the developer can claim the difference back. That could be thousands of dollars, so check your documents closely.

You have two years after you take possession of the home to claim these rebates. You can get all the definitions, rules, and forms (search for form RC4028) through the Canada Revenue Agency’s website.