GST/HST New Housing Rebate – A Complete Guide by a Montreal CPA Firm Near You

Introduction

Many Canadians who purchase or build a new home, substantially renovate a property, or buy a newly constructed condo are eligible for the GST/HST New Housing Rebate, a valuable tax credit that can save thousands of dollars. But the rules are strict, the conditions are technical, and CRA frequently audits rebate claims—especially when occupancy, rental use, builder paperwork, or family arrangements are unclear. Misunderstanding the requirements can result in delays, denials, or full repayment of the rebate. This guide explains who qualifies, how the rebate works, and how to avoid CRA problems.

Legal and Regulatory Framework

The GST/HST New Housing Rebate is governed by the Excise Tax Act. The rebate applies when you: purchase a newly built home from a builder, construct a home on your own land, substantially renovate an existing home, convert a property for residential use, or acquire shares in a new housing co-op. The property must be used as your primary place of residence, or the primary residence of an immediate family member. The rebate consists of the federal portion (36% of the GST paid, up to a maximum) and, in HST provinces, a provincial portion. Quebec administers its own QST new housing rebate through Revenu Québec.

Key Court Decisions

In Tomas v. Canada, the court denied the rebate because the taxpayer never occupied the property, reinforcing the requirement of primary residence use. In Kossowan v. Canada, the court upheld CRA’s denial where occupancy documentation was insufficient. In Cha v. Canada, the rebate was denied after CRA determined that the taxpayer had rented the unit instead of using it as a principal residence. In Alterra Developments v. Canada, CRA successfully argued that the property did not meet the "substantial renovation" test. These cases illustrate CRA’s strict enforcement of eligibility rules.

Why CRA Audits New Housing Rebate Claims

CRA receives information directly from builders, land registries, mortgage lenders, and condominium developers. Red flags include: failure to occupy the home, property rented instead of lived in, applying for multiple rebates, questionable family-member occupancy, incomplete builder documentation, substantial renovations that do not meet the legal threshold, short-term flipping activity, and inconsistencies between mortgage records and tax filings. CRA often requests utility bills, driver’s licenses, insurance documents, school registration, and proof of actual residence.

Who Qualifies for the New Housing Rebate

You may be eligible if you: bought a new or substantially renovated home from a builder, built your own home, hired a contractor to build, converted a non-residential building into a home, or purchased shares in a new residential co-op. The key condition is that the home must be lived in as a primary residence by you, your spouse, or your children. Secondary residences, cottages, investment properties, and Airbnb rentals generally do not qualify.

Federal vs Provincial Rebates

In GST-only provinces (like Quebec), the rebate applies to the federal GST portion only. In HST provinces (Ontario, Nova Scotia, New Brunswick, PEI, Newfoundland and Labrador), the provincial portion may also be eligible. Rebate amounts vary: federal rebate is capped at a $350,000 home price, with partial phase-out up to $450,000. Provincial rebate thresholds differ dramatically and may be more generous.

New Residential Rental Property Rebate (NRRPR)

If the property is intended for long-term rental rather than personal occupancy, the purchaser may qualify for the NRRPR instead. This applies when the home is leased for at least one year. CRA audits these claims aggressively and requires a valid lease, rent payment evidence, and compliance with landlord rules. Short-term rentals do not qualify.

Required Documentation

To avoid delays or denials, taxpayers should retain: purchase agreements, statement of adjustments, invoices for construction or renovation work, proof of occupancy (driver’s license, hydro bills, school registration, home insurance), contractor agreements, bank payment records, and municipal permits. CRA often denies rebates due to missing or inconsistent documents.

Mackisen Strategy

At Mackisen CPA Montreal, we review eligibility before filing, prepare all rebate forms accurately, compile proof of occupancy, analyze builder agreements, determine whether the renovation qualifies as “substantial,” prepare NRRPR claims when applicable, respond to CRA audit letters, and handle appeals if CRA denies the rebate. Our structured approach ensures accuracy and maximizes your chance of approval.

Real Client Experience

A family purchasing a Montreal condo had their rebate delayed due to insufficient occupancy proof; we provided supplemental documents and secured approval. A client who built a new home had their rebate denied for missing contractor invoices; we reconstructed records and overturned the denial. An investor who mistakenly applied for the personal rebate instead of the rental rebate avoided penalties after we corrected the filing. A homeowner audited for substantial renovation claims passed after we documented that more than 90% of the building structure was replaced.

Common Questions

Do I need to move in before claiming? Yes. Can rental properties qualify? Only under the rental rebate. Can I qualify if the home is for my child? Yes, if used as their primary residence. Does Airbnb use disqualify me? Yes—short-term rentals invalidate eligibility. Can I reapply if denied? Yes—through appeals or correction.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps homeowners, landlords, builders, and developers secure GST/HST new housing rebates while avoiding CRA audit pitfalls. We analyze eligibility, prepare documentation, and defend your claim with complete precision.