Buying Real Estate – Newly Built Property & Hst Pointers
PLEASE NOTE THAT ANY INFORMATION ON THIS WEBSITE INCLUDING THE BLOG POSTS SHOULD NOT BE CONSIDERED LEGAL ADVICE AND READING IT DOES NOT GIVE RISE TO A SOLICITOR-CLIENT RELATIONSHIP. IT IS FOR GENERAL INFORMATION ONLY. AS EVERY SITUATION IS UNIQUE, PLEASE CONTACT A LAWYER FOR LEGAL ADVICE. Today’s post stems from a common inquiry with respect to HST-related consequences for clients buying a newly built property. This applies to newly built residential real estate property in Kitchener, Waterloo or anywhere else in the Province of Ontario. It is often the case that buyer that has signed up to purchase a newly built property either to reside within or to invest may not be fully aware of his or her HST-related obligations. This realization usually comes up at the time our office is contacted by a real estate client seeking closing costs or when the agreement of real estate is shared by a realtor while introducing the buyer(s) to our office for closing. Essentially, there are two types of HST issues that are addressed in this article. The first being the HST New Housing Rebate and the second being the HST New Residential Rental Property Rebate. The New Housing Rebate may be available for those buyers that are going to own and occupy the property (with limited exceptions). The property can be a newly built home or a condominium. The second rebate is relevant to a buyer that is buying for the purposes of investment. First, we touch on the HST New Housing Rebate which is the most common type for buyers. Put simply, if a buyer does not qualify for the HST New Housing Rebate, he or she has may be obligated to pay an additional portion when it comes time to close the transaction. This often comes as a surprise to many buyers when they visit or inquire about closing with their lawyer. The result could be that the buyer has to come up with thousands of dollars to close the deal. Eligibility for the HST New Housing Rebate has a number of criteria in addition to what’s mentioned here but the crux of it may be summarized as follows:
- The buyer (or a relation) has to have an intention to occupy the property as their primary place of residence at the time the agreement was signed.
- Once construction is substantially completed, the ownership has to be transferred to the buyer.
- The first occupant of the property must be the buyer or a relation.