Ottawa Opens Applications for New GST/HST Housing Rebate Program
The federal government said it has started accepting applications for its new GST/HST housing credit this week, which could save first-time buyers up to $50,000 on the purchase of a new or heavily renovated home.
The measure, which fulfills a key election promise for Prime Minister Mark Carney, effectively eliminates, for qualifying buyers, the federal portion of the sales tax that applies to the purchase of newly built homes worth up to $1-million. It provides a partial rebate of the tax for homes worth up to $1.5-million.
First-time buyers who entered into an agreement to buy a new home any time from March 20 of last year are eligible to receive the full or partial rebate of the federal sales tax.
The rebate, which is set to expire at the start of 2031, represents an attempt by Ottawa to spur more housing construction during a sluggish period in Canada’s property market.
‘
For most consumers, the rebate will come in the form of a discount at the time of purchase. Those who bought a home before the government started administering the rebate will be able to apply for it through an online form.
g applications for the rebate, it won’t start processing them until later this year, as its system for handling the new tax credit is not fully set up yet, according to the CRA’s website.
The new policy is a revamp of a long-standing GST/HST credit, which has become irrelevant for most buyers. Dating back to 1991, the old rebate allows those buying a home as a primary residence to receive a full credit for homes up to $350,000 in value or a partial rebate for homes up to $450,000.
Ottawa hasn’t adjusted those price thresholds since the measure came into effect some 35 years ago.
Last year, the Parliamentary Budget Office found that only 4 per cent of housing completions in Canada’s 17 largest census areas were eligible for the full original rebate because home prices have risen far above those price caps.
The PBO also estimated that roughly 71,000 people will receive a roughly $27,000 subsidy over the life of the new GST/HST credit for first-time buyers.
As Ottawa rolls out the larger federal credit for first-time buyers, other levels of government are also contemplating larger tax breaks on new homes as a way to jump-start residential construction.
Ontario Premier Doug Ford has teased the possibility that his government will boost tax relief for buyers of new homes in its coming budget.
Ontario offers a rebate of up to $24,000 on provincial sales taxes to those who buy a new home as a primary residence. The province is also matching the federal government’s new credit for first-time buyers on the provincial portion of the HST for homes up worth to $1-million. Altogether, an eligible buyer could save a maximum of $130,000 in taxes in Ontario.
But earlier this year, Mr. Ford said that his government is considering a larger rebate for all buyers because limiting the larger tax credit to first-time buyers “didn’t move the needle” on housing starts.
Mr. Ford said he hopes the federal government will also expand its tax rebate to all buyers.
“We want affordability, and 13-per-cent off a home is a big chunk of money now,” said Mr. Ford.
This article was first reported by Globe and Mail
