Many new home and condo buyers are confused with the new home HST rebate and new rental property rebate. Below we outlined the facts about the HST rebate in Ontario.
First of all, both end-users and investors are eligible to receive the HST rebate, the processes however are quite different.
End users means you occupy the new property as the principal resident for at least one year. End uses apply HST Rebate through New Home Rebate (NHR). In most cases, The NHR is directly claimed by the developer on the purchaser’s behalf and in turn, buyers receive the rebate in the form of a discounted purchase price. Note: The majority of pre-construction price lists have the HST rebate built in already.
If you do not live in the property as the principle resident, you will be required to pay back the rebate on closing.
Investors who plan on leasing their new home or condo from the begining are required to apply for the HST rebate through a New Residential Rental Property Rebate (NRRPR). All investors, even foreign buyers, are eligible to receive the HST rebate under a NRRPR.
To qualify, you’re required to provide a one-year residential lease guarantee to prove the newly built residence will be rented to a tenant.
Investors are required to pay the HST upfront and will be reimbursed down the line – usually within a two or three-month time frame of providing the lease agreement. Therefore, investors must have more cash-on-hand at the time of purchase.
Even under the NRRPR, investors who flip their new condo or house in under one year are required to pay the HST in full. After the first year, the unit can be sold without voiding the HST rebate.
You’re eligible to apply for an HST rebate two years after a new home’s closing date. After those two years, the HST rebate doesn’t apply anymore.
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