Getting a rebate on the provincial portion of the HST paid on your renovations in Ontario

As I mentioned in my previous post, many Ottawa home owners will not be able to claim the GST rebate offered when a home is substantially renovated or built new. That's because in many cases, it is unlikely that the new or substantially renovated home will be valued at less than $350,000 - the threshold to receive the full rebate from the federal government.
Fortunately, the provincial government is more realistic in its rebate program and starting July 1, 2010 all Ottawa home owners will be able to claim at least part of the provincial portion of the HST they paid to substantially renovate their home.

Unlike the federal program, the provincial program is based on the amount of money you spend to renovate, not the final value of the renovated house and land. The amount you receive depends on whether you paid HST on the purchase of the land.

Where the provincial component of the HST was paid on the land, an individual would be entitled to a new housing rebate of 75 per cent of the provincial component of the HST paid on qualifying construction expenses (including land), up to a maximum rebate amount of $24,000. Owner-built homes with qualifying construction expenses over $400,000 would qualify for the maximum rebate amount of $24,000.

Where the provincial component of the HST was not paid on the land, an individual would be entitled to a new housing rebate of 75 per cent of the provincial component of the HST paid on qualifying construction expenses (not including the land), up to a maximum rebate amount of $16,080 (i.e., 67 per cent of the maximum housing rebate of $24,000).

Here's how it breaks down for a renovation of up to $500,000.

Reno Cost PST paid Rebate Effective PST

$100,000 $8,000 $6,000 2.0%

$200,000 $16,000 $12,000 2.0%

$300,000 $24,000 $16,080 2.6%

$400,000 $32,000 $16,080 4.0%

$500,000 $40,000 $16,080 4.8%

That's good news for home owners renovating in Ontario.

For more information on this program check out Harmonized Sales Tax Information Notice 4 on the Ontario Ministry of Revenue website.