How the HST Rebate in Ontario Works
The Ontario HST rebate is a break on the Harmonized Sales Tax cost for the purchase of the new home. Buyers must intend to use the home as their own home in order to be eligible. Detached houses, townhouses, and condos all fit the bill. The Condo HST rebate specifically helps the buyer who purchases newly built or drastically renovated condos as private homes.
Buyers can be eligible for up to $24,000 in provincial rebates and up to $6,300 from the government. The incentives are based on buyer intention, and that's where property flippers are in trouble.
Why Property Flippers Don't Qualify
House flipping is a business venture. That means houses purchased with the intention of renovating and reselling are considered business transactions by the CRA, not homes. Since only owner-occupiers qualify for the HST rebate in Ontario, flipping excludes you from the standard rebate as well as the Condo HST rebate.
The Canada Revenue Agency (CRA) carefully examines rebate claims. If your only intention was not to use the property, your rebate claim can be denied, and you can be asked to repay, pay penalties, or face audits.
CRA Scrutiny and Rebate Reversals
Most investors have attempted to qualify for the Condo HST rebate by claiming themselves or relatives as residents. But the CRA often audits individuals. If the agency concludes your intent was to sell, not reside, they can claw back your rebate, even years after.
Prior to making a costly error, it is sensible to seek professional guidance. Rebate4U has advised thousands of Ontarians through these complex regulations.
What Are Your Options as a Flipper?
Although flippers do not qualify for the HST rebate in Ontario, there may still be options for savings. If you intend to rent out the property in the long term (one year or more), you may qualify for the New Residential Rental Property Rebate (NRRP). This is particularly relevant to condo investors who rent out their units instead of selling. Always ensure you have the CRA's documentation requirements to avoid clawbacks.
Rebate4U can help you determine whether you qualify for the NRRP or other rebates and ensure your application is accurate and complete.
Maximize Your Rebate Legally and Strategically
House flipping can be profitable, but it typically denies you access to substantial tax advantages like the Ontario HST rebate and the Condo HST rebate. The rebates are not designed for short-term property holders. Wrong intentions can cost you in penalties and lost gains.
If you're unsure of your rebate entitlement or are weighing rental or ownership, call Rebate4U. We have trained professionals who will guide you through the rebate process, ensuring that you're always compliant and receive all the money you're entitled.
