HST rebate for house in Richmond Hill

Edited by Admin
Bill again here,
 
One of my clients bought a preconstruction home for 1.1M in Richmond Hill off plans from a builder.  I saw online that they are not eligible for a HST Rebate.  Can you confirm this?  Also, how much should I tell them that they will need to pay on closing if they decide not to move in?
 
Thank you,
Bill

Answers

By HST Relief
Hi Bill,
 
The Purchase Agreement for pre-construction houses or condos bought from developer will outline how the builder intends to handle the HST.  The usual case is this:  the builder includes the non-rebateable portion of the HST in the sticker price in the purchase agreement and the rebate-able portion (rebate-able through the HST New Housing Rebate) is due to the CRA on closing.  Now, the Purchase Agreements are usually written assuming that the purchaser will move in and use the property as a primary residence and the agreement usually includes an assignment of the right to the rebate over to the builder.  If this property does become the primary residence of the purchaser (or select immediate family members), the builder will cover the HST for the client and get it adjusted through their operating company with CRA the following month.  However, if it is an investment, the purchaser is responsible for the HST due on closing and to file for their own rebate.
 
So, for a 1.1M property, it's likely that there is $24,000 in HST that will be due on closing (pending confirmation by reading the full purchase agreement).  After the $450k mark, the rebate maxes out at $24k.  And, most builders leave the only rebate-able portion as the balance due on closing.  It's true that at this purchase price, the purchaser is not eligible for the Federal portion of the rebate, but they are not paying for that on closing anyway.  The purchaser will pay the maximum Provincial rebate on closing and if they have a 1 year lease with a tenant, they will be eligible to reclaim this back.
 
HST Relief: Rebates and Loans helps clients close their investment properties in 2 ways - we lend the amount of HST due on closing to ensure that investors can close on their properties and maintain their investments.  We also file for HST rebates for clients to get the money you paid back!  Please give us a call at 1.866.832.1990 or email us at info@hstrelief.ca  Our team of accounts are happy to consult on your particular situation for free.  

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