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GST Rebates: Three Types When Buying from a Builder

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NOTE: GST does NOT exist for resale homes and is only applicable when buying a new home from a builder.

  1. GST GOVERNMENT REBATE (typically assigned by buyers to builders where GST is included sale price)

    The GST government rebate applies to new homes purchased from a builder which are to be used as a primary place of residence for the purchaser or an immediate family member as defined by the governing rules. Purchasers of new homes priced up to $350,000.00 may qualify for the maximum rebate of $8,750.00 or 36 per cent of the GST paid on the purchase price, whichever is less. For homes priced at more than $350,000.00 (but less than $450,000.00), the rebate gradually reduces to no rebate for homes selling for $450,000.00 or more.

    NOTE: The rebate is almost always assigned directly to the builder(as referred to in the fine print of most builder sale agreements) since GST is typically included in the purchase price; therefore, the GST rebate is not a practical consideration for most purchasers unless the purchaser is paying GST in addition to the purchase price.

    WATCH OUT: for projects on the subway line with small apartments (primarily one bedrooms) which are marketed by the builder primarily towards the investor purchaser (rather than an intended owner/occupier type of buyer). In some of these projects, the GST Rebate (that would usually be obtained by the builder directly from the government in a typical owner-occupied project) will be paid by the purchaser investor to the builder in addition to the purchase price as a closing adjustment. In such an event, or in any case when an investor does not qualify for the GST rebate to be paid directly to the builder (having been assigned to the builder by the purchaser as stated in the terms of the purchase agreement with the builder), the purchaser investor may apply for a return of the "lost" GST rebate (which will be paid to the builder by the buyer as a closing adjustment). Such an application form for a GST rebate refund can be obtained by phoning 1-800-959-2221 and ask for the GST rebate refund application form #524 and explanatory booklet #RC-4231.

    The following chart shows how to calculate the GST New Housing Rebate for new homes.

    Purchase Price Rebate Calculation
    $350,000 or Less $8750 or 36% of the GST paid, whichever is less
    $350,000 to $450,000 $8750 X ($450,000 - Price)/100,000
    $450,000 or more No Rebate

  2. GST TRANSITIONAL REBATE (MAY 2006) - ( 7% TO 6%)

    On May 2, 2006, the government of Canada announced a reduction to the GST from 7% to 6%. As a result, purchasers of newly constructed dwellings who executed the Agreement of Purchase and Sale with the builder on or before May 2, 2006 AND where possession AND ownership of the dwelling takes place after July 1, 2006 are entitled to a Transitional Rebate representing the 1% reduction less any applicable GST rebate credited to the purchaser on the statement of adjustments. GST transitional rebate forms (being form GST193E) can be accessed at Canada Revenue Agency’s website www.cra-arc.gc.ca

  3. GST TRANSITIONAL REBATE 2008 - (6% TO 5%)

    The further reduction in the GST from 6% to 5% entitles a purchaser who executed a builder agreement before October 30, 2007 AND where possession AND ownership takes place after January 1, 2008, to a transitional rebate of the 1% reduction.

    NOTE: A purchaser who signed the builder purchase agreement on or before May 2, 2006 and where possession and ownership take place after January 1, 2008 is entitled to both rebates. The same transitional rebate form is used (form GST193E) accessed at Revenue Canada’s website www.cra-arc.gc.ca for either GST transitional rebates or for both together.

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