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The Ontario government has announced the removal of the harmonized sales tax on new homes under $1 million and a reduction of the HST for new homes between $1 million and $1.85 million, for all new home purchases, for the next year. Previously, only first-time home buyers could receive a rebate on up to $50,000 of the federal portion of HST. The government release estimates the expanded 13 percent HST rebate could stimulate an additional 8,000 housing starts in Ontario next year, supporting up to 21,000 jobs and boosting Ontario\u2019s GDP growth by $2.7 billion.<\/p>\n
Copies of the Ontario\/federal government news releases can be accessed here<\/a>, and a copy of the BILD\/OHBA joint release on the announcement can be accessed here<\/a>.<\/p>\n This measure will take effect on April 1 and will run until March 31, 2027. A full 13 per cent sales tax reduction will apply to new homes with a purchase price under $1 million for all buyers of new homes, and where the home is to be used as their principal residence. The change will provide a flat $130,000 sales tax reduction for new homes between $1 million and $1.5 million. For purchases between $1.5 million and $1.85 million, a declining tax reduction from $130,000 to the existing $24,000 provincial rebate amount will apply. New homes in excess of $1.85 million will continue to receive the $24,000 provincial rebate. Only purchases of new homes made on or after April 1 are eligible for the sales tax reduction\/exemption. Per Ontario government officials, the rebate\/tax reduction can be signed back to the vendor on the agreement of purchase and sale (APS). The current sales tax rules will continue to apply for existing signed agreements of purchase and sale.<\/p>\n As currently defined within the regulations, substantially renovated new homes are treated as new housing for tax purposes and are included in this new policy measure. \u201cSubstantially renovated\u201d is defined by the Canada Revenue Agency here<\/a>, but, in short, means that at least 90 percent of the non-structural interior finishes have been removed and replaced.<\/p>\n Today\u2019s announcement is the result of years of advocacy work by BILD, the Ontario Home Builders Association, the Residential Construction Council of Ontario and other industry groups. This latest policy change is designed to reduce upfront homeownership costs, help restore momentum in Ontario\u2019s housing market and directly support the continued construction of new homes to meet the needs of Ontario\u2019s growing population. BILD and OHBA have been consistently advocating for this measure to help support the industry, member companies and their employees in light of the downturn in sales from 2022 onwards. The associations have been vocally steadfast that the first-time new home buyers\u2019 program is insufficient.\u00a0 <\/strong><\/p>\n BILD and OHBA are partnering with MNP to provide members with implementation guidance during a webinar scheduled for April 7 at 9:00 ET. Members can register here<\/a>.<\/u><\/a> A form to collect member questions will be circulated prior to the webinar.<\/p>\n As part of their joint advocacy, OHBA, BILD and Peter Norman, vice-president and economic strategist at Altus Group, developed two background papers. The first<\/a>, presented to finance minister, Peter Bethlenfalvy, and minister of municipal affaris and housing, Robert Flack, summarized the economic impact of the current downturn on our sector and assessed the impact of full HST relief. The second<\/a>, presented to treasury board president, Caroline Mulroney, demonstrated the combined impact of full HST relief and a 50 percent reduction in development charges across Ontario.<\/p>\n BILD and OHBA will continue to work with both the federal and provincial government to implement structural and material DC reductions. In order to support advocacy on this front, they have commissioned Daryl Keleher of KPEC to provide a roadmap<\/a>\u00a0 on how to achieve this objective. This paper has been presented to both the provincial and federal governments and selected municipalities.<\/p>\n Ontario government leaders including premier Doug Ford and Flack signalled their intention to make this change<\/a> at a RESCON meeting in January.<\/p>\n<\/div>\n