Understanding the HST on a Prefab Home in Ontario

Confused about HST on your new prefab home in Ontario? We break down when it applies, who pays it, and how the New Housing Rebate can put money back in your pocket.

Taxes are rarely exciting, but understanding HST (Harmonized Sales Tax) is crucial for accurately budgeting your prefab home in Ontario. Let's demystify it.

The Golden Rule: Is It a "New" Home?
HST generally applies to the sale of a new home. If you are the first owner of a newly constructed prefab home, you will pay HST.

How is the HST Applied?

1. On the Home Itself: The manufacturer will charge HST (13%) on the sale of the home structure.

2. On Related Services: HST will also be charged on the delivery, assembly, and installation services.

The Very Important Rebate:
The good news is the GST/HST New Housing Rebate. If you are building a new primary residence, you can likely recover a portion of the federal GST (5%) part of the HST.

Key Conditions for the Rebate:

• The home must be your (or a relative's) primary residence.

• The total cost of the home (land + building) must be below a certain threshold.

Who Handles This?
Your manufacturer will often guide you, and the rebate can sometimes be assigned to them at the time of sale, reducing the upfront HST you pay. However, it is critical to consult with an accountant who specializes in Canadian real estate to ensure you file correctly and maximize your rebate.

Bottom Line: Factor 13% HST into your budget, but know that a significant portion may be returned through the New Housing Rebate.