Can I get the HST rebate if I rent the home out?

No, and this is the single largest cash-flow surprise in Ontario pre-construction. It catches investors every single year.

Why the owner-occupied rebates do not apply

Both the federal first-time buyer GST rebate and the Ontario ENHR require the home to be the primary place of residence of the buyer or a relation, and require the buyer to be the first occupant. A tenant is neither.

So if your plan is to rent the unit out, you are not eligible for the rebates the builder priced into your purchase.

What happens at closing

Remember that your price was almost certainly quoted net of HST rebate, with the rebate assigned to the builder. When you tell your lawyer the home is a rental:

• The assignment fails. The builder does not get the rebate.
• The builder bills you the rebate amount at closing.
• You pay it in certified funds on closing day, on top of your down payment, land transfer tax and adjustments.

On a $1,100,000 freehold townhome, that is up to $80,000 of provincial relief you now have to fund yourself, at the worst possible moment.

Then you claim it back

You apply to CRA for the New Residential Rental Property (NRRP) rebate yourself, after closing, with a signed one-year lease and the supporting documentation. More on the NRRP.

It is a real rebate and investors do receive it. But note the sequence: you pay first and recover later, and the recovery takes months. Builders will not assign the NRRP, because it is not theirs to assign.

The two mistakes to avoid

Telling the builder you will live there when you will not. The rebate forms are sworn. Misrepresenting occupancy to obtain a rebate is a CRA matter, and your lawyer will not help you do it.

Not budgeting for it. Plenty of investors have had to scramble for an extra $60,000–$80,000 in the last three weeks before closing because nobody told them this. If you are buying to rent, build the gross HST into your cash-to-close from day one.

If your plan is somewhere between the two, you might live in it, you might rent it, that ambiguity is worth resolving before you sign, not at closing. Let’s talk it through.