Do I have to pay HST when selling a new build?
Do I have to pay HST when selling a new build? You might be wrong — read this first.
Quick answer
Short version: it depends. If you’re selling a property that was sold as a brand-new home by a builder or sold while still inventory, HST usually applies. If you’re selling a used residential home (even if it was originally a new build and later lived in), most resale sales are HST-exempt. This is tax law, not opinion.
How to know if HST applies
- Seller status: Was the seller a builder or someone who held the property as inventory for sale? If yes — HST is usually charged.
- Property type: Newly constructed homes and condos sold for the first time are generally taxable supplies under GST/HST rules.
- Use before sale: If the home was occupied as a place of residence for any significant period by the owner, a later resale is typically treated as a used residential complex and is exempt from HST.
- Substantial renovation: If a residential property was substantially renovated and sold, it can become a taxable supply.
- Commercial use: If the property was used for short-term rentals, business or commercial purposes, GST/HST can apply on resale.
Common scenarios and what they mean
- Builder -> Buyer (first sale): HST applies. The builder must charge and remit HST. Buyers often pay HST on top of the purchase price unless the purchase qualifies for a new housing rebate.
- Buyer -> Owner who lived in it -> Resell: Generally HST-exempt. Resales of used residential properties are normally outside the HST net.
- Buyer flips before occupancy: If the original buyer sells before it’s ever occupied, HST could apply — consult your tax advisor.
- Substantial renovation by seller: Taxable. The sale will likely attract GST/HST.
Rebate and tax recovery notes
There are provincial and federal new housing rebates that can reduce the HST cost for qualifying buyers. If HST was paid on a new build, the buyer may be eligible for a rebate depending on price thresholds and province. Builders and developers may also recover input tax credits for HST paid on business inputs.
Practical steps to protect yourself
- Confirm seller status on the agreement of purchase. That tells you if it’s a taxable supply.
- Ask for a clear HST clause in the contract showing whether HST is included or extra.
- Get a written statement from the vendor or builder about HST registration and whether a rebate was applied.
- Talk to a tax lawyer or accountant before signing — HST on real estate moves fast and penalties are real.
Bottom line
HST on a new build sale is real when the seller is in the business of selling new housing or the property is effectively “new” at time of sale. Most private resales of lived-in homes are exempt. Don’t guess. Verify seller status, contract wording, and rebate eligibility.
For a clear, local answer tailored to your property, contact Tony Sousa — local real estate expert who handles tax-sensitive deals: tony@sousasells.ca | 416-477-2620 | https://www.sousasells.ca
If you’re listing or buying a new build, we’ll cut through the tax fog and put the right numbers on the table.
