How can you recuperate the taxes when purchasing a new home?
Many people wonder if they have to pay the taxes when they purchase a home. You should know that when you purchase a used home, you don?t have to pay any taxes! However, if you purchase a new home you cannot avoid paying them. The GST and the PST are added to the purchase price of your new property. Therefore, if you purchase a home for $200,000, you will add more than $30,000 in taxes!
The granted reimbursement is 36% of the total of the GST and PST. The maximum reimbursement for the GST is $8,750 and for the PST it?s $5,642. The higher the purchase price, the lower the reimbursement is.
When the purchase price exceeds $450,000 there is not a GST reimbursement available. For the PST, the maximum is fixed at $225,000.
First of all, at the time of sale, the contractor must bill the buyer for the GST and PST. It is possible to recuperate a part of these taxes, however you need to meet certain conditions:
¨ The property and the land are acquired during the same transaction
¨ The property is a building with one apartment or co-ops
¨ The property title is transferred to you when the construction/renovation is complete
¨ You, or someone close to you, is the first occupant after the work is completed
¨ The property is your, or someone close to you, usual residence
¨ The property?s purchase price is less than $450,000 to have the right to the GST reimbursement and less than $225,000 to have the right to the PST reimbursement.
If you meet these conditions, your contractor can pay the GST and the PST reimbursements directly to you or credit them.
One thing to note: you have two years to apply for the reimbursements from the date of the transfer of the property. It is important to apply as soon as possible so that you may profit from them quickly.
During the process of buying a new home, for each contractor contacted, ask them about their method of tax reimbursement. After all it is your money! It?s better to have it in your pocket and reinvest it how you want than giving it to the government and contractors.
Also, if you make major renovations, you can have the right to these same reimbursements. The government considers major renovations as:
Repairing or transforming an existing building completely or almost (90% or more), taken out or replaced, with the exception of the foundations, exterior walls, interior support walls, flooring, roof and stairs.
Remember that when you purchase a new property, you have the right to receive the GST and PST reimbursements! If you don?t know or don?t apply for them, someone somewhere will profit from your ignorance.
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