HST Credit for homebuyers of newly constructed houses          

Newly constructed residential homes where possession and title pass after June 30, 2010 will be subject to 13% HST, with the exception of those “grandfathered” contracts where the written agreement for the contract was before June 18, 2009, where the 5% GST will apply. 

Where 13% HST is charged, a new housing rebate is available if the purchase is a primary residence to the purchaser or used as a residential rental property.  The rebate is 75% of the Ontario portion of HST (8%) paid up to $400,000 of the purchase price of the home to a maximum rebate of $24,000 with no reduction for homes greater than $400,000 in value. 

The federal rebate is 36% of the GST/Federal portion of HST on the first $350,000 of the home for a maximum of $6,300.  The credit is reduced from a maximum of $6,300 for homes greater than $350,000 and the rebate eliminated for homes greater than $450,000 in value.

The Ontario rebate, although a different mechanism than the federal rebate, will be administered by the federal government in a similar manner to which the distinct Nova Scotia rebate is administered.  This is another example of the how the HST isn’t quite harmonized and there is a distinct federal and provincial component of the tax.