Purchasing a new-construction home in Ontario means paying the Harmonized Sales Tax (HST) on the purchase price. The HST in Ontario is 13%, composed of a 5% federal component (GST) and an 8% provincial component (PST). For a home priced at $600,000, that represents $78,000 in tax. Fortunately, the federal and provincial governments offer rebate programs that return a portion of the HST to eligible buyers.
The Federal GST/HST New Housing Rebate
The federal rebate applies to the GST portion of the HST. Eligibility and amounts depend on the purchase price of the home:
- Homes priced at or below $350,000: Buyers may receive a rebate of 36% of the GST paid, up to a maximum of $6,300.
- Homes priced between $350,000 and $450,000: The rebate is gradually reduced (clawed back) on a proportional basis. At $450,000 the federal rebate reaches zero.
- Homes priced above $450,000: No federal rebate is available.
This information is based on the Canada Revenue Agency's published guidelines. Buyers should review the current rules on the CRA GST/HST New Housing Rebate page for the most up-to-date thresholds.
The Ontario New Housing Rebate
Ontario offers its own rebate on the provincial portion of the HST. Unlike the federal rebate, the Ontario rebate does not have a price cap that eliminates eligibility entirely:
- Buyers receive a rebate of 75% of the Ontario portion of the HST (8%), up to a maximum rebate of $24,000.
- The $24,000 maximum applies to homes priced at $400,000 and above. Below that threshold, the rebate is 75% of the 8% PST paid.
- There is no upper price limit that disqualifies a buyer from the Ontario rebate. A home priced at $800,000 still qualifies for the full $24,000 Ontario rebate.
How Builders Typically Handle the Rebate
In most new-home purchases in Ontario, the builder includes the HST rebate in the advertised purchase price and requires the buyer to assign the rebate back to the builder at closing. This means the sticker price you see already reflects the rebate, and you do not need to apply separately.
Always confirm with your builder whether the advertised price is inclusive of the HST rebate assignment. This is standard practice, but the specifics should be clearly outlined in your Agreement of Purchase and Sale.
Who Qualifies?
To qualify for the new housing rebate, the buyer (or a relation of the buyer) must intend to use the home as their primary place of residence. The rebate is not available for homes purchased strictly as investment or rental properties, although a separate GST/HST New Residential Rental Property Rebate exists for landlords of new rental housing.
Example Calculation
For a new home priced at $600,000 in the Orillia area:
- Total HST (13%): $78,000
- Federal rebate: $0 (price exceeds $450,000 threshold)
- Ontario rebate: $24,000 (maximum)
- Net HST after rebate: $54,000
If the builder has included the Ontario rebate in the purchase price (standard practice), the buyer's effective cost already reflects this $24,000 reduction.
Key Takeaways for Orillia and Muskoka Buyers
New-home prices in the Orillia, Severn, and Muskoka corridor generally range from the high $400,000s to the $900,000s. At these price points, the Ontario rebate of up to $24,000 applies to virtually every purchase, while the federal rebate may be limited or unavailable. Understanding how these rebates work helps buyers budget accurately and avoid surprises at closing.
For detailed and current information, consult the Canada Revenue Agency website or speak with a qualified real estate lawyer familiar with Ontario new-home transactions.