How To Avail GST/HST Refund For A Completely Renovated Home Or Condominium?

  • January 25, 2017

You may be entitled to claim the GST/HST new housing rebate if you:

  • Substantially renovated your existing house;
  • Built a major addition onto your existing house if, along with that addition, you also renovated the house.

Substantial renovation

If a house has been substantially renovated, it is generally treated as a newly built house. However, major changes have to be made to meet the definition of a substantial renovation e.g. the interior of a building is essentially gutted. Generally, 90% or more of the interior of an existing house is the minimum that has to be removed or replaced to qualify as a substantial renovation.

You do not have to remove or replace the foundation, exterior and interior supporting walls, roof, floors, and staircases to meet the 90% test. If you do remove or replace any of these during a substantial renovation, the GST/HST paid for doing this or for the removal or replacement is also eligible for the rebate.

Any fair and reasonable method can be used to determine if you meet the 90% test. For example, comparing the square footage of the renovated areas to the total floor space of the house is an acceptable measure of the 90% test. You can also compare the square footage of floor and wall space of the areas renovated to the total floor and wall space of the house.

If all or part of an unfinished basement was renovated into a liveable area, this area would be taken into account in applying the 90% test.

A renovation of your basement, or adding a garage or a deck to your existing house, by itself, would not meet the definition of a substantial renovation and you would not qualify for the new housing rebate.

An addition to a house is not considered to be a substantial renovation, as it is the existing house that must be renovated. For example, if a 2,000 square foot bungalow is being renovated and a 300 square foot addition is added, the 90% test does not consider the addition. However, if the renovation of the 2,000 square foot bungalow is found to be a substantial renovation, the GST/HST paid on the addition is also eligible for the rebate.

Major Addition

You may qualify for the new housing rebate when you build an addition to your house, along with the renovation of the existing house. The addition should at least double the size of the liveable areas of your existing house, which is absorbed into the new one. An example would be adding a full second story to an existing bungalow. Along with doubling the size, the changes to the existing house and use of its rooms after construction should be so great that the existing house ceases to exist.

The construction of a porch, sunroom, family room, or bedroom by itself is not considered to result in a newly built house.

If an individual begins a substantial renovation of his/her house while living in the house, the individual will have two years from the date the renovations are begun to substantially complete the renovations and another two years after that date to claim the rebate.

Timelines

If the individual does not occupy the house when the renovations are begun, but then begins to occupy it before the renovations are substantially completed, the individual will have two years after the date of occupancy to substantially complete the renovations, and another two years after that date to claim the rebate for the tax paid on these renovations. If the house is not substantially renovated within two years after occupancy, the time limit for filing a rebate application is still a maximum of four years from the date of occupancy, but only tax that has been paid and which became payable up to two years after the date of occupancy may be included in the rebate application.

If the individual does not live in the house until after the renovations are completed, the rebate claim must be made within two years after the substantial renovation is completed.