Balance Magazine

Buying a new‑build home in Ontario is not just a major life milestone—it’s also a significant tax event. The federal government and the Province of Ontario now offer enhanced GST/HST rebates that can substantially reduce the real cost of purchasing a new home.

At Nungisa Law, we review builder agreements every day and see how these rebates are built into the price and legal wording of new home contracts. Understanding how the GST/HST New Housing Rebate and the Federal First‑Time Home Buyer GST/HST Rebate work is critical if you want to avoid unpleasant surprises at closing—or months later when the Canada Revenue Agency (CRA) reviews your file.

Below, we break down these two key rebates in clear, practical terms.

1. The GST/HST New Housing Rebate: The “Standard” New‑Build Benefit

The GST/HST New Housing Rebate is the long‑standing program that allows buyers of qualifying new homes to recover part of the GST or HST paid on their purchase.

In simple terms, Ontario buyers may qualify if:

• They buy a newly built home from a builder, or a substantially renovated home, and GST/HST is charged on the purchase price.
• The property will be their primary place of residence, or that of a close family member—not purely a rental investment.
• They or their relation are the first people to occupy the home after construction is substantially complete.
• The new home is located in Canada. In Ontario, an additional rebate applies on the provincial portion of the HST, which can further reduce the tax burden.
• The purchase price falls within the program’s price limits; above certain thresholds, the rebate is reduced or capped.

When these conditions are met, the buyer can receive a partial refund of the GST/HST paid on the new home.

How builders usually apply this rebate

In many Ontario new‑build transactions:

• The builder calculates HST on the full purchase price.
• They then apply the New Housing Rebate to arrive at a lower net price.
• The buyer usually signs an agreement assigning the rebate to the builder; in return, the builder charges the net price directly on the Agreement of Purchase and Sale (APS) or on the Statement of Adjustments at closing.

Crucially, the standard New Housing Rebate does not require you to be a first‑time home buyer. You can already own another home (even in another province) and still qualify, as long as the new home is intended to be your primary residence and you meet the technical requirements.

2. The Federal GST/HST First‑Time Home Buyer Rebate: Extra Relief for True First‑Timers

Layered on top of the standard rebate, the federal government has introduced an enhanced GST/HST rebate for first‑time home buyers. This program is designed to provide additional tax relief to individuals purchasing their first qualifying home.

You are generally considered eligible if:

• You are buying or constructing a new or substantially renovated home that will be used as your primary residence.
• GST/HST applies to the purchase or construction.
• At least one buyer qualifies as a “first‑time home buyer” under the federal definition. This typically means that:
  • You are 18 or older and a Canadian citizen or permanent resident.
  • You have not lived in a home you owned, or in a home owned by your spouse or common‑law partner, during the calendar year of closing or in any of the four preceding calendar years.
• You will be the first occupant of the new home.
• The purchase price falls within the eligible range for the enhanced rebate (there is a price band where the rebate is maximized, then it phases out above certain levels).

When all of these criteria are satisfied, you may receive a much larger federal GST/HST rebate than under the standard new housing program—potentially saving tens of thousands of dollars in tax on an Ontario new‑build purchase.

3. How Ontario Builder Contracts Use These GST/HST Rebates

From a legal and practical perspective, the way rebates are handled in your Agreement of Purchase and Sale (APS) matters as much as your eligibility.

Common features we see in Ontario builder contracts include:

• The purchase price is stated as “HST included, net of applicable rebates”, sometimes with both a “gross” and a “net” price.
• The buyer agrees to assign all GST/HST rebates (standard new housing and, where applicable, first‑time buyer rebates) to the builder.
• The builder applies these rebates on the Statement of Adjustments at closing so that the buyer feels the benefit immediately through a reduced net price.
• If CRA later denies all or part of a rebate, the APS often states that the buyer must repay the difference to the builder, along with any interest or penalties.

This structure can work smoothly when:

• The buyer’s representations in the contract (about using the home as a primary residence and being a first‑time home buyer) are accurate.
• The purchase price stays within the programs’ thresholds.
• The tax rules do not change unfavourably between signing and closing.

However, it can create significant financial risk if:

• The buyer does not truly meet the “first‑time home buyer” test but checks the box in the APS anyway.
• The property ends up being used as a rental, not a primary residence.
• CRA or the province later concludes that the rebate was incorrectly claimed and demands repayment.

In those situations, the builder will often look to the buyer to reimburse the lost rebate—sometimes long after the excitement of closing has passed.

4. Practical Tips for Ontario Buyers Considering a New‑Build

If you’re an Ontario purchaser signing a builder APS that refers to GST/HST New Housing Rebates or a First‑Time Home Buyer Rebate, Nungisa Law recommends that you:

1. Clearly distinguish the two programs.
   • The New Housing Rebate applies to many buyers of qualifying new homes used as a primary residence, whether or not they are first‑time buyers.
   • The First‑Time Home Buyer GST/HST Rebate is a separate program with strict four‑year look‑back rules and a technical definition of “first‑time”.
2. Ask the builder exactly which rebates are built into the price.
   • Are they basing the net price only on the standard new housing rebate?
   • Or are they also assuming eligibility for the enhanced first‑time buyer rebate?
3. Confirm with your mortgage lender which price they use for qualification.
   • Do they assess your borrowing capacity on the gross price (before rebates) or the net price (after rebates)?
   • Is your approval robust enough to withstand a scenario where you only get the standard rebate and not the first‑time buyer top‑up?
4. Have a real estate lawyer review your APS.
   • Make sure your statements about occupancy and first‑time status actually match your reality.
   • Understand the repayment obligations in the event CRA or the province denies a rebate.
   • Ensure that the rebate language in the APS does not push more tax risk onto you than necessary.

5. How Nungisa Law Helps New‑Build Buyers Navigate GST/HST Rebates

Because GST/HST rebates intersect tax law and contract law, it’s easy for buyers to focus only on the savings and overlook the underlying legal commitments. At Nungisa Law, our role is to:

• Translate complex GST/HST clauses in builder contracts into plain language.
• Check that the rebate assumptions in your APS are appropriate, given your personal and financial situation.

If you’re considering a new‑build purchase in Ontario and your builder is quoting a “net price including GST/HST rebates,” we strongly recommend sending us the APS before you sign at the sales office. A short legal review now can prevent a very expensive surprise later—especially when CRA or the builder comes back months after closing, asking to recalculate your GST/HST rebate.

To schedule a consultation with Nungisa Law about GST/HST rebates on new homes, contact us today.