Goods & Service Tax

Goods & Service Tax (G.S.T) is payable on the purchase of a new home, substantially renovated home or bare land; the G.S.T is 5% of the property purchase value. If the new property is going to be a revenue property, then the 5% G.S.T would apply to the full purchase price.  However, if the property is going to be your primary residence, it may qualify for a partial rebate on G.S.T. depending on the purchase price. 

- For every $1000 of purchase price over $350,000, your maximum rebate would reduced by 1%.  As the purchase price increases, the amount of rebate reduces until there is no rebate, which occurs at homes that are priced at or above $450,000.  Therefore, new homes with a property value of $450,000 or more would not qualify for a GST rebate.

- For new homes with a fair market value of up to $350,000, a partial rebate of 36% is available.   In another words, you pay about 3.84% GST (instead of the entire 5%) on the purchase price.

- For new homes with a fair market value between $350,000 and $450,000, partial rebate on GST is available on a sliding scale and gradually reduced to none. It is calculated by using the following formula:

[ A x ($450,000 – B) ] / $100,000.00

where (A) is the lower of $7560.00 or 36% of G.S.T and “B” is the greater of $350,000 or the fair market value of the new home. 

[For example] Assume the value of a home is $400,000, the rebate would be:

[ $7560.00 x ($450,000 - $400,000) ] / $100,000 = $3780.00.

With this partial rebate, this home would have a G.S.T. payment of $24,000 (5% of $400,000) less $3,780.00, which would be $20,220.00.

G.S.T and the Resale Home

Resale of a used residential property is sold exempt from G.S.T.

Revenue Canada defines "used residential property" to include an owner-occupied house, condominium, apartment, summer cottage, vacation property or non-commercial hobby farm. They refer to "used" as residential property that has been occupied as a residence before you bought it.

Used property can also mean a recently built house that is substantially completed and has been sold at least once before you buy it. For example, if a new house is purchased and resold before being occupied, the home's resale price will normally be exempt from G.S.T.

Note
- This rebate is only available to individuals and companies are not eligible for this rebate.
- Rules regarding G.S.T change frequently.

Disclaimer: The enclosed information while deemed to be correct, is not guaranteed.