The 13% Harmonized Sales Tax applied to newly constructed homes, substantially renovated homes, and converted properties in Ontario. Builders typically include HST in the advertised purchase price, but the tax still represents a significant cost. Buyers of new homes priced under $450,000 may qualify for a partial HST rebate from both the federal and Ontario portions, reducing the effective tax burden. The rebate phases out completely for homes priced above $450,000 (federal) and $400,000 (Ontario).
Why It Matters
HST on new construction is a cost that resale buyers do not face, and it can add tens of thousands of dollars to a purchase. On a $700,000 new-build condo in the GTA, the HST component is roughly $91,000 -- though builders typically absorb some of this in their pricing. Understanding whether the builder's price includes or excludes HST, and whether you qualify for any rebate, is essential before signing a pre-construction agreement.
Real-World Example
You buy a pre-construction condo in Vaughan for $650,000. The builder's purchase price includes HST, with the builder assigning the HST new housing rebate back to themselves. The total HST on the unit would be $84,500, but since the price exceeds the $450,000 federal rebate threshold and the $400,000 Ontario rebate threshold, no rebates are available to reduce the tax. If you purchased the unit as a rental investment and did not qualify for the new housing rebate, you could apply for the HST new residential rental property rebate instead, recovering a portion of the HST paid.
Ontario & GTA Context
In Ontario, the 13% HST is composed of 5% federal GST and 8% Ontario PST. The federal new housing rebate provides up to $6,300 on homes priced under $350,000, phasing out between $350,000 and $450,000. The Ontario rebate provides up to $24,000 on homes priced under $400,000. Since the vast majority of GTA new builds exceed these thresholds, most Toronto-area buyers receive no HST rebate. Builders typically structure their pricing assuming the rebate is assigned back to them, so read your purchase agreement carefully to understand the HST treatment.
How It Works in Practice
When buying pre-construction, confirm in writing whether the purchase price is inclusive or exclusive of HST and whether the builder is assigning the rebate. If you are purchasing as an investment and plan to rent the unit, ask your accountant about the NRRP rebate, which has different eligibility criteria. Keep all invoices and documentation for any HST rebate applications.
Common Questions
Do I pay HST on a resale home in Ontario?▾
Can I get an HST rebate on a new home over $450,000?▾
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