Q: I started to build a second home in 2006 and it’s been an ongoing project for the last 10 years. My question is now that we sold our principle residence and moved to this second, new-build home for our retirement, can we apply for the GST/HST rebate?
— Ron Gagnon, question from moneysense.ca
Answer from Romana King, senior editor and real estate specialist at MoneySense:
Wow. Congratulations! Building your own home can be a tough feat, but by doing it in stages it sounds like you were able to earn and save to complete the project without going into massive debt. That’s smart.
However, your prolonged build may have thrown a snag into whether or not you can claim the new-build GST/HST rebate. It all depends on when your municipality signed off on the liveability of your home and how much your home is worth.
To construct a new-build home, a builder or homeowner must first obtain building permits (and, in some cases, a demolition permit). Typically, building permits are good for up to two years—so, as long as the construction is complete 730 days from the date the building permit was issued, you’re in compliance of your city’s building department. If you’d applied for your permits and completed your new-build construction before January 1, 2012, then all you’d need to do is move in. But if you applied for permits or completed your renovation after Jan. 1, 2012, you will then need to apply for an Occupancy Permit, which is only issued once your new-build is inspected one last time. Skip this step and your home will have “open” permits on record. These permits would need to be closed if you wanted to do any work on the home in the future or if you wanted to sell your home. Remember, the final inspection is to ensure you are compliant with the current building codes. If you wait 10 years before closing your permit, then an inspector will hold you accountable to the most current code, which may have changed over the years since you’ve built the home or done work on the house.
(For new-condo owners, it’s possible to occupy a building that still requires some construction. That’s because the developer can apply for an Authority to Occupy application. This is an official request for a permit to allow a portion of an unfinished building to be occupied, and is applied for after consulting with the Building Inspector that the building is ready for such a permit. Sample of an Authority to Occupy permit from the City of Toronto can be seen here.)
Not complying with necessary permits won’t directly impact you from applying for the new-build GST rebate, but waiting too long to apply will certainly hinder your ability to get this money. That’s because there’s a time limit in applying for the HST/GST rebate on a new-build home. The specific limits vary depending on if you’re applying for the federal rebate or a provincial rebate. While some provincial jurisdictions require you to apply within a year after you complete the construction of your home, others allow you up to four years once your house is sealed up (and ready to be inhabited). The federal GST rebate time limit is two years from the completion date of your new-build/substantial renovation.
In your case, be mindful of the lag between the time you completed your custom-build and when you moved in. If it’s greater than the prescribed time limit in your province (or more than two years, if you’re applying for the federal rebate) than you may no longer be entitled to the rebate(s).
What’s your home worth?
However, there is one final criteria you must consider when applying for either federal or provincial rebates: These rebates are only available on homes valued at $450,000 or less. If you paid the builder more than that sum, or you bought the new-build for more than that sum, you’re not eligible for the rebate.
Please be advised I’m not an accountant or a legal professional. For specific advice pertaining to your situation, please seek out a professional for your particular situation.
Romana King is the senior editor and real estate specialist at MoneySense. She is also a licensed real estate sales agent. Follow her on Twitter (@RKHomeowner) or on Facebook. If you have real estate concerns or questions, please email Romana directly at .