Buying a Home

Goods Services Tax (GST) and Harmonized Sales Tax (HST)

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Depending on the location, when building or buying a new home, you will be required to pay federal GST (Goods Service Tax) or HTS (Harmonized Sales Tax). This is only applicable if your home is in a province that has GST/HST.

GST/HST New Housing Discount

In all the provinces in Canada, if the value of your brand new home is less than $450,000, you may qualify for a discount of 5 percent of the GST/HST portion, but your home has to be your primary residence.

This discount varies based on the value of your new home. For instance, if your home value is less than or equal to $350,000, the GST rebate may reduce to 3.5 percent of the GST portion. You will be required to file your personal income tax together with a completed Form GST190.

Provincial Sales Tax (PST) on Canada Mortgage Home Corporation (CMHC) Insurance

CMHC insurance covers the mortgage lender in case you default on your on your mortgage loan. It is also known as mortgage default insurance. If you have saved enough to pay a deposit (down payment) of 20 percent or more you are save from CMHC insurance, but if you make a down payment below 20% on a home, you will be required to purchase mortgage default insurance. The CMHC insurance amounts to a few thousand dollars and is paid together with the mortgage throughout the life of the loan.

PST (Provincial sales tax) on CMHC insurance is associated with the CMHC insurance and is payable in cash on the closing day. The PST amount varies from one province to the other. Example, you may have to pay 7% in Manitoba, 8% in Ontario, 9.98% in Quebec and so on.

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