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When is an Investment Property Eligible for an HST Rebate?

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Is an Investment Property Eligible for an HST Rebate?

The introduction of Harmonized Sales Tax on new build properties in July 2010 has put a strain on investors. The Canadian Government put a couple of rebates in place to help buyers of new construction properties handle the financial burden of the increased HST. For owner-occupied residences, the builder will incur the HST rebate short-term as to not have the purchaser required to pay it on closing, a program called the HST New Housing Rebate.  The process works a bit different for the investor who will not reside in the new construction condo, house or townhome.  For an investment property, the HST rebate can get a little trickier. Since the newly built residence will not be owner-occupied, the investor will be responsible to cover a component of HST calculated based on the purchase price of the property prior to closing the sale. However, when dealing with newly built investment properties, the purchaser can apply for the HST New Residential Rental Rebate for up to 2 years after final closing and title transfer. This means that investors will be asked to cough up tens of thousands of dollars ($16,000 - $29,000, depending on the purchase price) in order to close the deal, putting a serious additional financial burden on the investor.
HST Relief: Rebates & Loans is a company designed to support purchasers of new construction.  Our company provides 2 main services:  We file HST Rebates and we lend the HST due on final closing for investors who need to come up with an additional $16,000 - $29,000 on closing.  For your specific questions, give us a call at 1.866.832.1990. 

What Exactly Is the HST Rebate?

The HST Rebate exists in 2 forms: the HST New Housing Rebate (for primary residences) and the HST New Residential Rental Rebate (for investors).  The Rental Rebate allows investors of newly constructed properties to recover a portion of the taxes paid to secure the purchase of the property and transference of ownership. Now, the breakdown can be a little confusing, as the amounts change depending on the purchase price of the property.
The HST Rebate offers individuals who purchase a newly constructed property the opportunity to recover both a percentage of the federal portion and a percentage of the provincial portion of the Harmonized Sales Tax. In Ontario, the HST is 13%, breaking down into a 5% and 8% split between the federal and provincial government.


There are some exceptions in regards to recovering your rebate.
If the base price of the property is greater than or equal to $450,000, the federal portion of the HST Rebate will be unavailable to investors.
The provincial portion of the New Housing Rebate is available for up to $400,000 of the purchase price of a property. This limits the provincial portion of the New Housing Rebate to a maximum of $24,000 ($400,000 x 75% x 8%) for a 400,000+ purchase price.  The amount due on closing can exceed this maximum value, which is why it is always important to consult a professional about your HST rebate.
Furthermore, the HST New Residential Rental Rebate is only available to individuals seeking to acquire property for investment purposes. It is available to individuals who meet all of the conditions for claiming the rebate. For exmaple, if you use the property as a secondary home or for vacation time, it is not considered elgibile for the HST New Resiential Rental Rebate program.  You must have a 1 year lease with a tenant. 
Perhaps the most important thing is that individuals who are interested in or have purchased a newly built investment property are made aware of the HST rebate, the increased financial burden that the tax imposes at the time of final closing and the ways investors can get the additional cash necessary to close the deal.  Since banks do not lend money specifically for HST, investors have had to turn to independent companies that help lend, file and claim your HST Rebate.  Call us at HST Relief: Rebates & Loans with your specific questions and concerns - 1.866.832.1990. 

How much is HST for closing a condo?

How much should I expect in HST due in order to close my condo?  Do I pay CRA with my income tax that year?


By HST Relief (Admin)
HST is applied to all new construction purchases from a builder.  A portion of the HST is built into the purchase price and a portion is due upon final closing. The portion due on closing is the HST rebate amount.  Now, whether you have to pay this amount due on closing or not depends on how you are using the property.  So, If you are going to be using it as your primary residence, the builder will cover it for you and adjust it with CRA themselves.  If you are renting the property out, then you will owe the HST on closing and then have to file for the HST rebate to recover the amount back from CRA.  
HST for a new construction property is due at the time of final closing and not when you file your income taxes.  You may also file for the HST rebate at any time of the year, right after final closing and registration of the building.  You do not have to wait until you do your annual return.
Our team specializes in HST rebate filings and we specialize in answering all the questions about how HST will affect your condo or new house closing.  We also offer loans to cover the amount of HST due on closing - we strongly suggest that you do not lie to CRA, as they have a new initiative to audit condo owners who are wrongfully claiming primary residence at their new condos.  Use our loan service for a short term loan to cover the HST due on closing and recover it back with the HST rebate 45-60 days later.
1.866.832.1990 or email us at info@hstrelief.ca

Is there HST on an income property?

Is there always HST on an income property purchase?


By HST Relief (Admin)
There is always HST when you purchase brand new construction from a builder.  In this case, there is HST due on closing if you are not using the property as your primary residence.  In essence, if you buy new construction from a builder and are using it as an investment property, then you will owe the HST rebate amount on closing.  To get it back, you will need to file through one of the HST rebate programs.
We specialize in these filings.  Call us with questions pertaining to your particular situation.  Give us a call to put together your HST Rebate today 1.866.832.1990 or email us at: info@hstrelief.ca

Understanding HST before I buy a new condo

I have been looking at some Tridel units that are for sale preconstruction.  Before I purchase anything, I want to know what (and why) I'll owe in HST.  The unit I have my eye on is listed fromt he builder at $299,995.


By HST Relief (Admin)
HST in Ontario is applied to new construction purchases from a developer or builder.  HST does not apply to resale real estate purchases.
When signing a purchase agreement, there is a portion of the HST built into the purchase price and a portion that is due on closing.  If one is purchasing a brand new construction condo, house or townhome from a builder and will be using it as a primary residence, then the balance of HST will be covered by the HST New Housing Rebate.  The builder will pay CRA and get credited back that amount through their operating company shortly after your new construction closes.  However, if you are not using this property as a primary residence, you will owe this portion of HST on closing along with all your other closing costs (land transfer taxes, levies and development charges).   
For your case, if you are going to use the property as a primary residence, then you will not owe HST on closing.  If you are going to rent it out or use it for some other purpose, then you will owe a portion of HST when the property transfers to your name on closing.  For a purchase price of 299,995, that amount will be $22,243.
We suggest you get a 1 year lease from a renter and file for the New Residential Rental Rebate.  Our company provides the service of filing AND lending the HST amount due on closing in the form of a loan that will be paid off once we get your rebate back from CRA.  Call us for more questions at 1.866.832.1990.   

How much HST will I have to pay on closing for my new condo?

I just purchased a preconstruction condo as an investment property in Mississauga for $400,000.  How much HST will I have to pay on closing?  Thanks! 


By HST Relief (Admin)
The portion of HST due on closing for a $400,000 new construction investment property will be approximately $28,500.
If you are need of bridge financing to close the property, please contact us at HST Relief: Rebates & Loans.  www.hstrelief.ca 1-866-832-1990

First Canadian Place • 100 King Street West • Suite 5700 • Toronto, ON • M5X 1C7

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