1

I'm buying a home from a develpoer, and I qualify for the first time homebuyer rebate. I'm wondering how Ontario's HST rebate for first time homebuyers is calculated.

The paragraph below is taken from http://www.rev.gov.on.ca/en/notices/hst/02.html and I thought I'd check with you financial gurus, because its not entirely clear.

The effect of the enhanced rebate would be to apply the provincial portion of the single sales tax at a rate of two per cent on the first $400,000 of the purchase price of a new home and at a rate of eight per cent on the portion above $400,000. The rebate would be calculated as 75 per cent of the provincial portion of the single sales tax payable on the purchase of a new home, up to a maximum rebate of $24,000.

What exactly is the 'provincial portion'? Is it the old PST? (8% of purchase price)?

So does that mean if I'm buying a place for $300,000 before taxes, the rebate would be

0.75 x 0.08 x $300,000 (to a max of $24,000) = $18,000 rebate ?

Thanks!

3

Short answer: Your calculations are right, the rebate is 6% of your purchase price. Which is $18,000

Long answer: HST will not affect new home prices below $400K. Which is confirmed by the 2nd paragraph under the Enhanced New Housing Rebate heading

The new housing rebate would be enhanced so that new homes purchased as primary residences across all price ranges would qualify for a rebate of up to $24,000, while continuing to ensure that, on average, new homes priced up to $400,000 would not be subject to additional tax compared to the retail sales tax (RST) currently embedded in the price of new homes.

So there will be no extra taxes compared to when you purchase it now versus pre-HST in June 31, 2010. However, at the time of sale, you'll still pay the tax of 300K * 0.13 = 39K but get a rebate when you file your taxes of 300K * 0.06 = 18K

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.