Building, purchasing and selling new houses

As of July 1, 2010, Ontario harmonized its retail sales tax with the GST to implement the HST at the rate of 13% and British Columbia (BC) harmonized its provincial sales tax with the GST to implement the HST at the rate of 12%. As of July 1, 2010, Nova Scotia increased its HST rate from 13% to 15%.

Transitional rules for the HST in Ontario and BC may apply to certain transactions for housing that straddle the July 1, 2010 implementation date. For more information, see Housing.

A retail sales tax (RST) transitional new housing rebate - Ontario and a provincial sales tax (PST) transitional new housing rebate - British Columbia is available for new or substantially renovated housing in those provinces in certain situations where the construction straddles the July 1, 2010, implementation date.

GST/HST applies to the selling price of new houses. This includes newly constructed houses or substantially renovated houses with major additions, and relocated houses. A new house is not generally occupied as a place of residence or lodging until after the construction, renovation, or relocation is complete.

Builders registered for the GST/HST charge the GST/HST on the sale of a house and can claim input tax credits (ITCs) to recover the GST/HST paid on the goods and services used in the construction, substantial renovation, or relocation of the house.

If the buyer is an individual who will use the house as his or her primary place of residence and the purchase price is less than $450,000, the buyer may be entitled to the GST/HST new housing rebate. To determine if your buyer qualifies for the rebate, see Guide RC4028, GST/HST New Housing Rebate.

Also, a provincial new housing rebate may be available to an individual for some of the provincial part of the HST the individual paid to buy, build or substantially renovate their primary place of residence that is located in Ontario or BC. For more information see, Ontario new housing rebate or BC new housing rebate.

2006 and 2008 transitional rebates

Effective January 1, 2008, the GST rate is reduced from 6% to 5%, and the HST rate from 14% to 13%. In certain cases, GST at 6% or 7% or HST at 14% or 15% will apply to the purchase of a new house even where ownership and possession are transferred after December 31, 2007. In this case, you may be entitled to claim a transitional rebate. For more information, see GST/HST transitional rebates.

Occasionally, a new house can be sold exempt from GST/HST. For example, if an individual builds a residential complex for his or her own use and not in the course of a business or an adventure or concern in the nature of trade and then sells it due to extenuating circumstances, the sale would be exempt from GST/HST.

Other exempt sales of residential property include:

• the sale of residential housing by someone other than the builder;
• the sale of previously occupied residential housing by a builder who is an individual where the residential housing is the builder's personal residence and no ITCs have been claimed for the house;
• the sale of previously occupied residential housing by the builder where the builder has previously paid the GST/HST because of the self-supply rules (GST/HST paid at the fair market value); and
• the sale of a house and the lease of land to a person where the house and land are parts of a residential complex and are both supplied by the builder.

Forms and publications

• Guide RC4028, GST/HST New Housing Rebate
• Form GST190, GST/HST New Housing Rebate Application for Houses Purchased from a Builder
• GST/HST Technical Information Bulletins B-092, Substantial Renovations and the GST/HST New Housing Rebate
• GST/HST Memoranda Series Chapter 19-0, Special Sectors: Real Property
• GST/HST Info Sheets GI-043, The 2008 GST/HST Rate Reduction and Purchases of New Housing

Related topics

• Guide RC4231, GST/HST New Residential Rental Property Rebate
• Form GST524, GST/HST New Residential Rental Property Rebate Application