GST/HST Rebate on Substantial Home Renovations

Are you doing a major renovation of your home? Did you know that you could recover some of the HST that you paid for the renovation? The Canada Revenue Agency (CRA) has the GST/HST New Housing Rebate which allows you to recover a portion of the HST you paid when renovating your home. The GST/HST New Housing rebate provides individuals who either purchase or substantially renovate their primary place of residence.

There are various different expenses which qualify for the GST/HST New Housing Rebate. Some of the expenses include subcontractor fees, plumbing, building materials, architectural fees, land (if you paid HST when acquiring it), and demolition costs. A complete list of the eligible expenses can be found in the CRA’s publication GST 191-WS Construction Summary Worksheet.

In order to qualify for the rebate, you need perform a major renovation on 90% of the liveable space of your home. A major renovation means that the interior of your house is gutted. However, you do not need to replace major components of your home such as the foundation, interior or exterior supporting walls, staircases or your roof. However, if you do, then the amounts paid would qualify for the rebate.

When determining whether or not your renovated 90% of your liveable space, there are no required calculation method set out by the CRA. Any fair and reasonable method can be used to determine if you meet the 90% test. For example, you can compare the square feet of the floor space renovated vs. the total liveable space of the house or comparing the total square feet of floor and wall space of the renovated space to the total wall and floor space of the house.

If you are living in Ontario, there are two rebates you are eligible to apply for which relate to the federal and provincial portions of the HST you paid.

The issue with the federal rebate is that it is limited based on the value of your home. If the post renovation value of your home is over $450,000, you will not be able to qualify for the credit. As a result, the majority of homes in Toronto do not qualify.

However, the provincial rebate does not have any limitation on the value of your home. Rather, the rebate has a limit to how much you can recover. You are able to receive a maximum of $24,000 if you paid HST when purchasing the land or $16,000 if you did not pay HST when acquiring the land. This rebate is calculated as a percentage of HST paid. You will receive 75% of the provincial portion of HST (8/13) up to your determined maximum.

Based on the Toronto market, it is unlikely that any renovated property would qualify for the federal rebate, but the provincial rebate would provide you with a significant cost recovery. The rebate can be applied for up to two

This specific rebates will only apply to you if you are using the home for personal use. There are other rebates available to you if you are completing a major renovation of a rental property.

If you have any questions about the housing rebates, please contact Geoffrey Blasutti at (647) 508-5555 ext 104 or at gblasutti@mccannllp.com.

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McCann and Associates LLP

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