HST rebate rules don’t include all your relatives:
Property Law, by Bob Aaron: Third parties named on title could disqualify your tax break.
Many buyers of new homes and condominiums may be surprised to receive a demand from Canada Revenue Agency (CRA) to repay as much as $24,000 in HST new-home rebates that they received on closing their purchases.
The purchase price of a newly constructed home is subject to HST. Typically, the price in a builder offer assumes that the purchaser is eligible for a rebate of part of the HST, and assigns it back to the builder as required by the purchase agreement.
In order to qualify for the HST rebate, the house or condominium must be acquired for use as the primary place of residence of the titled purchaser or his or her relation.
The tax law defines a relation to mean a blood relationship, including a child and grandchild, a brother or sister, and relationships by marriage or common-law partnerships.
Cousins, aunts, uncles, nephews or nieces, friends and business associates are excluded from eligibility.
if just one of the buyers does not qualify, even as the owner of a one per cent interest in the property, none of the buyers can get the rebate. If they received it on closing, and assigned it back to the builder as is typical, CRA will ask for it to be paid back, with interest. In other words, all of the buyers must qualify, not just most of them. There is no percentage allocation.
The CRA claim arises when a third party, who is not a close relation, has been placed on title at the insistence of a mortgage lender. This often occurs when the buyers themselves do not qualify for a mortgage.
Property Law, by Bob Aaron: Third parties named on title could disqualify your tax break.
Many buyers of new homes and condominiums may be surprised to receive a demand from Canada Revenue Agency (CRA) to repay as much as $24,000 in HST new-home rebates that they received on closing their purchases.
The purchase price of a newly constructed home is subject to HST. Typically, the price in a builder offer assumes that the purchaser is eligible for a rebate of part of the HST, and assigns it back to the builder as required by the purchase agreement.
In order to qualify for the HST rebate, the house or condominium must be acquired for use as the primary place of residence of the titled purchaser or his or her relation.
The tax law defines a relation to mean a blood relationship, including a child and grandchild, a brother or sister, and relationships by marriage or common-law partnerships.
Cousins, aunts, uncles, nephews or nieces, friends and business associates are excluded from eligibility.
if just one of the buyers does not qualify, even as the owner of a one per cent interest in the property, none of the buyers can get the rebate. If they received it on closing, and assigned it back to the builder as is typical, CRA will ask for it to be paid back, with interest. In other words, all of the buyers must qualify, not just most of them. There is no percentage allocation.
The CRA claim arises when a third party, who is not a close relation, has been placed on title at the insistence of a mortgage lender. This often occurs when the buyers themselves do not qualify for a mortgage.
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