HST on Resale Homes in Ontario? New Builds vs Used Properties

HST on resale homes in Ontario is generally not charged. When you buy a used residential property in Ontario, the sale is exempt from HST in most cases. However, new builds, substantially renovated homes, and certain commercial-to-residential conversions are subject to HST at the full 13% rate. Understanding which category your property falls into can save you tens of thousands of dollars or help you avoid a costly surprise at closing. 

This guide breaks down exactly when HST applies to Ontario real estate, what exemptions exist, and how new builds and resale homes are treated differently under the law. 

Does HST Apply to Resale Homes in Ontario?

The short answer is no. HST does not apply to most resale homes in Ontario. When an individual sells a used residential property that has been lived in as a primary place of residence, the transaction is exempt from HST. This means the buyer does not pay HST on the purchase price, and the seller does not collect or remit any HST to the Canada Revenue Agency.

This exemption exists because the government treats used residential real estate as a personal asset rather than a taxable supply of goods or services. The home has already been through the tax system at the time it was originally built and sold, so taxing it again on resale would result in double taxation.

It is important to understand that this exemption applies specifically to properties used as a place of residence. If a property has been used for commercial purposes or has been significantly altered, different rules may apply.

When Does HST Apply to New Builds in Ontario?

New residential construction is treated very differently from resale homes under Ontario’s HST rules. HST at the full 13% rate applies to the purchase price of a newly constructed home. This includes detached homes, semi-detached homes, townhouses, and condominium units that have never been occupied before.

For a new home priced at $700,000, the HST component would amount to $91,000 before any rebates. This is a significant cost that every buyer of a new build in Ontario must account for in their budget. Builders typically include HST in the listed purchase price, but it is always worth confirming this in the purchase agreement before signing.

The federal government and the province of Ontario both recognize that full HST on new homes creates an affordability barrier, which is why the HST New Housing Rebate program exists.

The HST New Housing Rebate in Ontario

The HST New Housing Rebate is designed to offset part of the HST paid on newly constructed homes. It consists of two components: a federal rebate and a provincial rebate and the amounts depend on the purchase price of the property.

For the federal portion, buyers can claim a rebate of 36% of the 5% federal GST paid, up to a maximum of $6,300, for homes priced up to $350,000. For homes priced between $350,000 and $450,000, the federal rebate is gradually reduced and phases out completely at $450,000.

For the Ontario provincial portion, buyers can claim a rebate of 75% of the 8% provincial component of HST, up to a maximum of $24,000. Importantly, this provincial rebate does not phase out based on purchase price the way the federal rebate does, which means buyers of higher-priced new homes can still claim the full $24,000 provincial rebate.

Substantially Renovated Homes and HST in Ontario

A resale home that has been substantially renovated is treated similarly to a new build under Ontario HST rules. If more than 90% of the interior of an existing home has been renovated, the CRA considers it substantially renovated, and HST applies to the sale.

This rule catches many buyers and sellers off guard, particularly in Ontario’s active renovation market. A property that looks like a resale home from the outside may still trigger an HST obligation if the interior has been gutted and rebuilt to a sufficient degree. Sellers who carry out substantial renovations and then sell the property may be required to register for HST, collect it from the buyer, and remit it to the CRA.

If you are buying or selling a renovated property in Ontario and are unsure whether the renovation threshold has been met, getting professional advice before closing is essential. Our team at Tax Return Filers Ltd. provides HST Returns in Brampton, Brampton Corporate Tax Filing, Bookkeeping in Mississauga, and Toronto Accounting Services to help buyers, sellers, and investors navigate HST obligations on Ontario real estate with confidence.

HST on Rental Properties and Assignment Sales in Ontario

Rental properties add another layer of complexity to Ontario’s HST rules. If a newly constructed home is purchased with the intent to rent it out rather than use it as a primary residence, the buyer may not qualify for the HST New Housing Rebate. In this case, the buyer can apply for the HST New Residential Rental Property Rebate instead, which is available to landlords who rent the property to tenants as their primary place of residence.

Assignment sales, where a buyer sells their right to purchase a new build before closing, have been subject to HST since May 2022. The federal government made this change to address tax avoidance in the pre-construction market. If you are involved in an assignment sale in Ontario, HST applies to the profit portion of the assignment, and both parties should be aware of their obligations before the transaction closes.

New Build vs Resale Home: HST Comparison at a Glance

Understand how HST applies and which rebates you may qualify for when buying different types of homes. 

Property Type	HST Applicable	Rebate Available
Resale home (used as residence)	No	Not applicable
New build (owner-occupied)	Yes — 13%	HST New Housing Rebate
New build (rental property)	Yes — 13%	New Residential Rental Property Rebate
Substantially renovated home	Yes — 13%	May qualify for rebate
Assignment sale (post May 2022)	Yes — on profit portion	No

What Ontario Home Buyers and Sellers Should Know?

Whether you are a first-time buyer, a seasoned investor, or someone selling a renovated property, understanding HST on Ontario real estate protects you from unexpected costs and compliance issues.

For a broader understanding of how HST works across registrations, filings, and input tax credits in Ontario, our guide on how HST works in Ontario covers the complete picture for businesses and property owners alike.

The key takeaway is simple. Resale homes are generally exempt, new builds are taxable but partially rebatable, and substantially renovated homes and assignment sales carry their own specific rules. Knowing which category applies to your transaction before you sign anything is the smartest move you can make.

Conclusion

HST on resale homes in Ontario is one of the most searched and often misunderstood topics in Canadian real estate tax. The rules are straightforward once you know them: used homes are exempt, new builds are taxable, and substantially renovated properties and assignment sales each have their own obligations. Whether you are buying your first home in Brampton, selling a renovated property in Mississauga, or investing in a pre-construction condo in Toronto, understanding HST from the start helps protect your budget and ensures you stay compliant with the CRA.