HST on new homes Ontario can be a major cost for buyers. If you’re buying a newly built home in Ontario, HST is a significant cost you need to understand and plan for. Many buyers are surprised to learn that HST applies to new home purchases — and even more surprised to discover that rebates exist that can significantly offset that cost. This guide breaks down the HST rules on new homes in Ontario, explains the available rebates, and helps you understand how much HST you’ll actually pay.

Does HST on New Homes Ontario Apply? What Buyers Must Know

Yes. In Ontario, HST (Harmonized Sales Tax) at 13% applies to the purchase price of new homes, including newly built detached homes, semi-detached homes, townhouses, and condominiums. HST does not apply to resale homes.

This is a critical distinction for buyers: when you buy a pre-construction condo or a newly built home from a builder, HST is part of the equation. When you buy an existing home from a previous owner, it is not.

The New Housing HST Rebate in Ontario

The good news is that there are federal and provincial rebates designed to offset a significant portion of the HST on new homes in Ontario. These rebates are administered jointly:

Federal GST/HST New Housing Rebate

The federal government offers a rebate on the GST portion (5%) of HST paid on new homes. The rebate is available for homes priced under $450,000 and provides a rebate of 36% of the GST paid. For homes between $350,000 and $450,000, the rebate is gradually phased out. For homes priced at $450,000 or more, there is no federal rebate on the GST portion.

The maximum federal rebate is $6,300 (for homes priced at or below $350,000).

Ontario New Housing Rebate

Ontario provides a separate provincial rebate on the PVAT (provincial value-added tax) portion of the HST. Importantly, there is no price cap on the Ontario rebate. The Ontario portion of the HST rebate is 75% of the provincial portion of HST paid, up to a maximum of $24,000.

This means that for a home priced at $500,000 or more, the provincial rebate is capped at $24,000 regardless of the purchase price.

How HST Works in Newly Built Home Pricing

Most builders in Ontario advertise new home prices in one of two ways:

• HST included (net of rebate): The price you see includes HST, with the rebate already factored in — but only if you qualify for the rebate (i.e., the home will be your primary residence).
• HST extra (plus applicable taxes): The listed price does not include HST, and you must add the full 13% HST to the price, then claim the applicable rebates.

This distinction is enormous and must be clarified before signing any Agreement of Purchase and Sale with a builder. Failing to understand whether the price is HST-inclusive can result in an unexpected six-figure addition to your purchase price.

HST on New Condos in Ontario: Key Considerations

Pre-construction condo buyers in Ontario face particular complexity around HST. Here’s what you need to know:

Principal Residence vs Investment Property

The HST rebate on new condos in Ontario is only available if the condo will be used as your primary place of residence — or the primary residence of a close family member. If you’re purchasing a pre-construction condo as an investment property to rent out, you cannot claim the same rebates. Instead, you may be eligible for the HST New Residential Rental Property (NRRP) Rebate, which is specifically designed for investors.

Assignment Sales and HST

As of May 7, 2022, HST applies to the profit made on assignment sales of new homes and pre-construction condos in Canada. This was a significant change that affects investors who “flip” assignments before closing. Both the assignor (seller) and the builder/developer have obligations around this tax. If you’re involved in an assignment sale, consult a tax professional before proceeding.

How Much HST Will You Actually Pay on a New Home in Ontario?

Let’s look at some practical examples to illustrate the actual HST cost on new homes in Ontario:

Example 1: New Home Priced at $800,000 (Primary Residence)

Full HST at 13%: $104,000. Ontario rebate (capped at $24,000): $24,000. Federal rebate: $0 (price exceeds $450,000 threshold). Net HST payable: $80,000. When builders say the price is “inclusive of HST, net of rebate,” they’ve already accounted for the $24,000 Ontario rebate in the advertised price.

Example 2: New Condo Priced at $500,000 (Primary Residence)

Full HST at 13%: $65,000. Ontario rebate (capped at $24,000): $24,000. Federal rebate: $0 (price exceeds $450,000). Net HST payable: $41,000. If the builder’s price is “plus HST minus rebates,” you need to add approximately $41,000 to the advertised price.

How to Claim the HST Rebate on a New Home in Ontario

In most cases, your builder will handle the HST rebate paperwork on your behalf, assigning the rebate to the builder in exchange for a reduction in the purchase price. This is standard practice and means you don’t need to file a separate rebate claim. However, you must sign an assignment of rebate form and provide documentation confirming the home will be your primary residence.

If you move into the home but later decide to rent it out, the CRA could claw back the rebate, as the eligibility requirement was that you intended to use it as your primary residence. Misrepresenting your intentions when claiming the rebate is considered HST fraud and can result in serious penalties.

Final Thoughts

HST on new homes Ontario is a significant cost that every pre-construction buyer needs to understand before signing. Knowing whether the listed price includes HST, whether you qualify for rebates, and how much you’ll actually pay at closing can mean the difference between a deal that works financially and one that doesn’t.

If you’re buying a pre-construction home or condo in the GTA or Durham Region and want expert guidance through the process, Team Rajpal is here to help. We work with buyers every day on new construction purchases and can help you navigate the financial details with confidence. Contact us today.

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