End of year usually means gathering up all of your receipts and making sure you take all of your permitted tax deductions. If you or your clients have purchased a new home or condominium in the past two years, you may have an HST rebate coming to you. Here’s why:
If you moved in on closing, no worries, the HST rebate likely went to the builder.
When you buy a new home or condominium from a builder, the HST is built into the price, provided you or a close relative moves into the property on closing. When that happens, the price stays the same and the HST rebate, usually at $24,000, goes to the builder on closing. This is one of the matters I will discuss during my review of a new home agreement with my buyer clients.
If you rented your unit on closing, or on occupancy, you likely paid extra HST on closing.
If you rented out your new home or condominium, then you likely were not credited with the HST rebate on final closing and ended up paying the builder an extra amount of HST on closing, again, usually close to $24,000. The good news is that as long as you signed a one year lease, you can apply for this full amount after closing, by making an application to the Canada Revenue Agency.
It is my practice to offer this service to any of my own buyer clients who have to pay this extra HST on closing. Still, I have seen many cases where buyers have forgotten to make this application, for various reasons. For example, when I gave a recent speech at a real estate brokerage about this, one of the agents came up to me and indicated that they had purchased a condominium a year ago and did not know about the rebate. I was able to assist them in obtaining the $24,000 HST rebate.
Unfortunately, a buyer only has two years from the date of closing to bring this application or they forfeit the HST rebate. Check your records and advise clients to check their own records to see if this applies to them. It is a great way to re-connect with past clients; you may be saving them a lot of money.
HST rebates also apply if you substantially build your own home.
Even when you build your own home and pay contractors yourself, you may still be eligible for a portion of the HST rebate, based on the HST you paid to the contractors, so keep all of your receipts.
In Ontario, Tarion delay payments must be made within one year of taking possession or ownership.
When you buy a new home or condominium, the builder must provide a firm or final closing date, for either taking ownership of a home or occupation of a condominium. If the final date is not met, the home or condo owner likely has a claim of $150 for every day that the firm date is delayed up to a maximum of $7,500. The claim is made to Tarion after you take ownership or possession, as the case may be. But there is a one-year limit on making the claim. Other provinces have similar legislation, penalties and time deadlines, so speak to a lawyer in your province to make sure.
A company I use to assist with all types of rebate claims is www.rebate4u.ca.
Mark Weisleder is a partner, author and speaker at the law firm Real Estate Lawyers.ca LLP. Contact Mark at firstname.lastname@example.org