GST/HST New Housing Rebate in Canada: The 36% Rebate Most Buyers Miscalculate

GST/HST New Housing Rebate in Canada: The 36% Rebate Most Buyers Miscalculate

Short answer: If you buy a newly built or substantially renovated home as your primary residence, the federal GST/HST New Housing Rebate refunds 36% of the GST, or of the federal 5% part of the HST, that you paid, up to a maximum of $6,300. The rebate is unreduced at a home value of $350,000 or less, phases out between $350,000 and $450,000, and is zero at $450,000 or more. On a $400,000 home in a GST-only province, the rebate is $3,150. Ontario buyers can also claim a provincial rebate of 75% of the Ontario part of the HST, up to $24,000, which has no price phase-out and is where the real money sits on an Ontario new build. Claim on Form GST190 for a home bought from a builder, or Form GST191 for an owner-built home, generally within two years. First-time buyers may qualify for the separate, larger First-Time Home Buyers' GST/HST rebate instead; that program is covered in our first-time buyer GST rebate guide, and this guide covers the standard rebate that applies to every buyer, first-time or not.

New construction is the one branch of Canadian home buying where the tax system hands money back, and it is chronically under-claimed and mis-estimated in both directions. Buyers in expensive markets assume the rebate phases out before it matters, which is true for the federal piece and false for Ontario's. Buyers in mid-priced markets assume 36% of all the HST they paid comes back, which overstates the federal rebate by the entire provincial part. And buyers who let the builder take the rebate as a credit at closing sometimes discover, a year later, that they never qualified and owe it back with interest. The rules are not complicated once they are separated into their three pieces: the federal rebate, the provincial rebates, and the claim mechanics. This guide separates them, with the arithmetic shown. For where this rebate lands in a full closing budget, see the closing costs hub and your province's guide in that series.

Piece 1: The federal rebate, exactly

The GST/HST New Housing Rebate is set out in section 254 of the Excise Tax Act and explained in the Canada Revenue Agency's Guide RC4028. The conditions, in plain terms:

• You are an individual, not a corporation or partnership.
• You bought the home from a builder, built it yourself on land you own or lease, or substantially renovated it. Substantial renovation is a defined test: generally at least 90% of the interior of the existing building removed or replaced, excluding the foundation, external and interior support walls, floors, roof, and staircases.
• The home is for use as the primary place of residence of you or a relation of yours, and you or that relation are the first individuals to live in it after the construction or renovation.
• GST, or the federal part of HST, was paid on the purchase or the construction costs.
• The price, or in owner-built cases the fair market value at substantial completion, is under $450,000 for any rebate at all.

The amount is 36% of the federal tax paid, capped at $6,300, and then reduced by the phase-out if the value exceeds $350,000. The phase-out formula is the piece buyers get wrong, so here it is in one line: between $350,000 and $450,000, multiply the unreduced rebate by ($450,000 minus the price) divided by $100,000. At $400,000 the multiplier is exactly one half. At $425,000 it is one quarter. At $449,000 the rebate is a rounding error; at $450,000 it is gone.

One subtlety decides real money in HST provinces: the 36% applies only to the federal part of the HST, the 5% slice. On a $340,000 Ontario home, HST paid is $44,200, but the federal rebate is 36% of the $17,000 federal part, which is $6,120, not 36% of $44,200. Every calculation error we see in buyer budgets starts there.

Five worked examples

Example 1: $340,000 new home, GST-only province (Alberta, BC, Saskatchewan, Manitoba, and the territories). GST at 5% is $17,000. The value is under $350,000, so there is no phase-out. Rebate: 36% of $17,000 = $6,120. Net GST after the rebate: $10,880.

Example 2: $400,000 new home, GST-only province. GST is $20,000. The unreduced rebate is the lesser of $6,300 and 36% of $20,000 ($7,200), so $6,300. Phase-out multiplier: ($450,000 − $400,000) / $100,000 = 0.5. Rebate: $3,150. Net GST: $16,850.

Example 3: $400,000 new home, Atlantic HST province (15%). HST paid is $60,000, of which the federal part is $20,000. The federal rebate uses only that $20,000: $3,150, the same figure as Example 2. The 10-point provincial part earns no federal rebate, and New Brunswick, Prince Edward Island, and Newfoundland and Labrador offer no provincial new housing rebate. Net HST: $56,850. This is why the Atlantic closing guides in this series treat the new-build tax line as nearly full freight.

Example 4: $340,000 new home, Ontario (HST 13%). HST paid is $44,200: a federal part of $17,000 and an Ontario part of $27,200. Federal rebate: 36% of $17,000 = $6,120, unreduced under $350,000. Ontario rebate: 75% of $27,200 = $20,400. Combined rebate: $26,520 of $44,200 paid. Net HST: $17,680.

Example 5: $600,000 new home, Ontario. HST paid is $78,000: federal part $30,000, Ontario part $48,000. Federal rebate: $0, because the value is above $450,000. Ontario rebate: 75% of $48,000 = $36,000, capped at $24,000. Net HST: $54,000. The federal phase-out, written for a housing market that no longer exists in Ontario, is not the program that matters here; the provincial one is, and it does not phase out by price.

Piece 2: The provincial rebates

Per CRA's RC4052 guidance for the home construction industry, provincial new housing rebates for the provincial part of HST are available in Ontario and Nova Scotia. Ontario's is the substantial one: 75% of the provincial part of the HST, to a maximum of $24,000, claimed on the Ontario schedule filed with the federal application (forms RC7190-ON or RC7191-ON depending on whether the home was bought from a builder or owner-built). Nova Scotia's provincial rebate is smaller and is calculated in RC4028; if you are building in Nova Scotia, work through the guide's Nova Scotia section or have your lawyer or accountant run it, because the provincial piece there interacts with the federal phase-out at price points common in the Halifax market. In GST-only provinces there is no provincial sales tax on a new home purchase to rebate (British Columbia charges GST only on new housing), so the federal rebate is the whole conversation there.

Piece 3: How claiming actually works, and the builder-credit trap

There are two routes to the money, and they allocate risk differently.

Route 1: the builder credits you at closing. Most buyers of builder homes never file the form themselves. The builder reduces the price by the rebate amount at closing, files the application, and keeps the rebate. This is convenient and legitimate, but the eligibility risk stays with you: if the CRA later determines you did not qualify, for example because the home was not your primary residence or a relation did not occupy it as required, the amount credited can be recovered from you, and builders' contracts routinely include an assignment and repayment clause for exactly this. Read the rebate schedule in your agreement of purchase and sale; it is usually a separate form you sign without ceremony, and it is the one that creates the liability.

Route 2: you file. If the builder does not credit the rebate, or you built the home yourself, you apply to the CRA: Form GST190 for a home purchased from a builder, Form GST191 plus the GST191-WS construction summary worksheet for an owner-built home, with the Ontario schedules attached in Ontario. The deadline is generally two years from the relevant date, typically the transfer of ownership or substantial completion and occupancy for owner-built homes; the exact start date depends on your situation and is set out in RC4028. Diarize it at closing, not from memory: a rebate of $6,120 to $24,000 lost to a missed two-year window is one of the more expensive calendar errors available to a homeowner.

The advertised-price trap. Builders in competitive markets advertise prices net of HST and rebates, meaning the sticker assumes you qualify for every rebate and nets them off. A buyer who does not qualify, an investor, a buyer of a second property, or a buyer whose value lands in the phase-out, pays more than the advertised net price, sometimes by the full tax. Every new-build comparison in your search should be rebuilt on a gross basis: price, plus full GST or HST, minus only the rebates you have verified you qualify for, using the formula in this guide rather than the sales office's summary.

Where the standard rebate meets the first-time buyer rebate

For purchases under the newer First-Time Home Buyers' GST/HST rebate, an eligible first-time buyer receives relief of up to 100% of the federal GST or federal part of HST, to a maximum of $50,000, on homes valued up to $1 million, phasing out to zero at $1.5 million. That program supersedes the standard rebate for buyers who qualify: you claim the better federal relief, not both stacked on the same tax. The standard rebate in this guide remains the program for everyone else: repeat buyers, buyers whose co-purchaser history disqualifies them as first-time buyers, and buyers of substantially renovated homes outside the first-time rules. Provincial rebates such as Ontario's are claimed alongside whichever federal relief applies to you. Eligibility, definitions, and worked examples for the first-time program are in our first-time buyer GST rebate guide.

New housing rebate discipline

1. Identify which parts of your tax are federal. The 36% applies only to the 5% federal part, never to the provincial part of HST.
2. Run the phase-out before you budget. Full rebate at $350,000 or less; half at $400,000; a quarter at $425,000; zero at $450,000.
3. In Ontario, model the provincial rebate separately: 75% of the 8% provincial part, up to $24,000, at any price. It is usually the larger number.
4. Rebuild every builder quote on a gross basis. Net-of-rebate advertised pricing assumes your eligibility; verify it before you rely on it.
5. If the builder takes the rebate as a credit, read the assignment clause. The repayment risk for an ineligible claim follows you, not the builder.
6. Diarize the two-year filing deadline if you are filing yourself, and keep the statement of adjustments and tax receipts with the application file.

Mistakes to avoid

• Applying 36% to the whole HST bill. In Ontario that error overstates the federal rebate by a factor of 2.6. The federal rebate is 36% of the federal 5% part only.
• Assuming the rebate is dead above $350,000. It declines on a formula, and $3,150 at a $400,000 value is still money. It is only dead at $450,000 and above, and Ontario's provincial rebate survives at every price.
• Confusing the standard rebate with the first-time buyer rebate. They are different programs with different caps ($6,300 versus $50,000) and different price ceilings ($450,000 versus $1.5 million). Claiming assumptions from one against the other misprices a new build by tens of thousands.
• Signing the builder's rebate assignment unread. The standard arrangement makes the buyer liable to repay a credited rebate the CRA later disallows.
• Missing the two-year deadline on an owner-built home. Owner-built claims carry the largest rebates in the standard program and the most paperwork; the deadline does not move for incomplete files.

A new-build rebate checklist

Every line should carry a figure and a source before your purchase agreement firms up.

• Tax actually payable: full GST or HST on the price, from the agreement, split into federal and provincial parts.
• Federal rebate: 36% of the federal part, capped at $6,300, phase-out multiplier applied if the value is between $350,000 and $450,000; or first-time buyer relief where you qualify.
• Provincial rebate (Ontario): 75% of the provincial part, capped at $24,000; (Nova Scotia): calculated per RC4028.
• Eligibility file: primary residence intent, first occupancy, and individual buyer status documented; any relation who will occupy identified.
• Claim route: builder credit with the assignment clause read, or self-filing on GST190 or GST191 with the two-year deadline diarized.
• Advertised price basis: gross price confirmed in writing wherever a net-of-rebate price was advertised.
• Interaction check: land transfer tax calculated on the price treatment your province applies, since in some provinces the transfer tax is computed on the price including or excluding the sales tax differently; your province's closing guide in this series states its own rule.

Timing: when the rebate money actually moves

If the builder credits the rebate, it lands at closing as a price reduction, and your cash-to-close falls accordingly; the CRA pays the builder, and your only cash exposure is the repayment risk if eligibility fails. If you file yourself, the money arrives after closing, so your closing budget must carry the full tax and treat the rebate as a recovery, not a closing input. Plan cash flow on that basis: on Example 4's Ontario home, a self-filing buyer needs the full $44,200 of HST at closing and recovers $26,520 later. Processing takes weeks to months depending on whether the CRA reviews the file, and first-occupancy or primary-residence reviews are the usual cause of delay. Keep occupancy evidence (identification showing the address, utility accounts, moving records) from the first month; assembling it during a CRA review is slower than filing it as you go. For owner-built homes, the rebate is calculated on the fair market value at substantial completion as well as the tax paid on construction costs, so the appraisal or valuation supporting that value belongs in the same file.

What to read next

• First-time buyer GST rebate in Canada: the up-to-$50,000 federal relief, its $1 million and $1.5 million thresholds, and who qualifies as a first-time buyer.
• Closing costs in Canada: the cash-to-close hub: where this rebate sits inside the full closing budget, province by province.
• Closing costs in Ontario: the provincial rebate alongside Toronto's double land transfer tax on a new build.
• Down payment rules in Canada: the other half of new-build cash, including how builders schedule deposits differently from resale.

Citations: Excise Tax Act, s. 254 (GST/HST New Housing Rebate); Canada Revenue Agency, Guide RC4028, GST/HST New Housing Rebate, and RC4052, GST/HST Information for the Home Construction Industry (canada.ca): rebate of 36% of the GST or federal part of HST paid, maximum $6,300, unreduced at a value of $350,000 or less, phased out to zero at $450,000 using the formula rebate multiplied by ($450,000 minus price) divided by $100,000; Form GST190 (houses purchased from a builder), Form GST191 and GST191-WS (owner-built houses); provincial new housing rebates available in Ontario and Nova Scotia, with the Ontario rebate at 75% of the provincial part of HST to a maximum of $24,000 claimed on forms RC7190-ON / RC7191-ON; application generally within two years. Figures verified against the CRA publications and worked examples above on October 21, 2026. Tax rules are amended in federal budgets, including the First-Time Home Buyers' GST/HST rebate enacted in 2026; confirm your position with the current RC4028 or a tax professional before relying on a figure.