How does HST apply to home sales?
Is HST due when you sell a house? Read this — it changes how you price, negotiate and close.
Quick summary (no fluff)
- HST applies to new homes and substantially renovated properties.
- Resale homes are generally HST-exempt.
- Contracts and closing statements must clearly state who pays HST and any rebates.
- A trusted realtor and lawyer keep the legal & paperwork clean so you don’t lose money at closing.
How HST actually works in home sales
If you’re buying a newly built house or a brand-new condo from a builder, HST is charged on the purchase price. In Ontario that’s 13% HST. For resale homes sold by ordinary homeowners, HST usually does not apply. That’s the baseline.
Where things get messy — and costly — is with the legal & paperwork: purchase agreements, assignment sales, substantially renovated houses, and how the builder lists the price. If the contract doesn’t spell out HST treatment, you can end up paying unexpected tax or chasing a rebate.
Practical examples
Example 1 — New condo from a builder
- Purchase price: $600,000
- HST (13%): $78,000
- Builder may include HST in the listed price or add it at closing. Buyers often qualify for a partial new housing rebate — but you still need the paperwork and lawyer to claim it.
Example 2 — Resale house
- Purchase price: $600,000
- HST: $0 (commonly exempt)
- Legal & paperwork step: ensure the contract confirms “no HST unless otherwise stated.” Your lawyer will confirm in closing adjustments.
Example 3 — Substantially renovated home
- If a home was gutted and rebuilt to the point the CRA calls it “substantially renovated,” it’s treated as new housing — HST applies. That classification depends on details in the renovation invoices and permits.
Key legal & paperwork checkpoints (do not skip)
- Purchase agreement: must state whether price is HST-inclusive or HST-extra.
- Assignment sales: HST can apply on assignment profits and must be addressed in contracts.
- Lawyer review at closing: your lawyer ensures HST is calculated correctly on the Statement of Adjustments.
- Rebate application: if eligible for a new housing rebate, paperwork must be completed precisely and submitted on time.
Why working with a top local expert matters
Legal language and tax rules aren’t abstract — they cost real money. A small oversight in paperwork can add tens of thousands to your closing bill or leave a rebate unclaimed. I handle the legal & paperwork details with lawyers and accountants so sellers and buyers get predictable outcomes.
For clear, no-nonsense guidance on HST and home sales — and to make sure your agreement and closing paperwork protect you — contact Tony Sousa. I’ll walk you through the legal & paperwork step-by-step and keep your closing clean.
Contact: tony@sousasells.ca | 416-477-2620 | https://www.sousasells.ca
Need a checklist for your closing? Ask me — I give one to every client.
