Ontario has introduced enhanced HST relief for eligible new homes, creating a meaningful opportunity for some homeowners to reduce the tax burden on a new build or substantial renovation.
While much of the public conversation has focused on production builders and subdivision homes, the enhanced rebate may also be relevant to custom home clients, including those building a new home on land they already own.
At Homes By Hendriks, many of our clients are not purchasing a pre-designed model home. They are planning a custom residence around their property, lifestyle, family needs, and long-term goals. Because of that, it is important to understand how the enhanced HST rebate may apply in a custom home context.
What Is the Enhanced HST Rebate?
Ontario’s HST is made up of two parts: the 8% provincial portion and the 5% federal portion, for a total of 13%.
Under the enhanced program, eligible buyers of new homes may receive significant HST relief. For eligible new homes valued up to $1 million, the relief may effectively remove the full 13% HST, providing up to $130,000 in combined savings.
The maximum combined relief of up to $130,000 is also maintained for eligible new homes valued above $1 million and up to $1.5 million. For eligible homes valued between $1.5 million and $1.85 million, the rebate is reduced gradually. For homes valued at or above $1.85 million, the existing Ontario New Housing Rebate of up to $24,000 may still be available if the normal eligibility requirements are met.
Because eligibility depends on the specific project, home value, timing, use, and ownership structure, clients should always confirm their situation with their accountant, lawyer, and tax advisor.
Read the official website HERE
Does This Apply Only to Production Homes?
No. This is one of the most important points for custom home clients.
Ontario’s guidance confirms that the enhanced New Housing Rebate may apply in several situations, including:
- purchasing a new or substantially renovated home from a builder;
- building or substantially renovating a home on land the individual owns or leases;
- hiring someone else to build or substantially renovate a home on land the individual owns or leases.
This means the rebate may be relevant to a custom home project where the client owns the land and hires a builder, such as Homes By Hendriks, to construct a new home.
That said, the process may not be identical to a standard subdivision home purchase. A custom home built on client-owned land may be treated as an owner-built home for rebate purposes, depending on how the project is structured.
Primary Residence Requirement
The enhanced New Housing Rebate is generally intended for homes used as the primary place of residence of the individual or a qualifying relation.
This means the rebate is not automatic for every new build. The intended use of the home matters. A custom home being built as the client’s primary residence may be treated differently than a home built strictly for resale, investment, or another non-primary-residence purpose.
Clients should be prepared to confirm who will occupy the home and whether the home meets the required eligibility criteria.
Timing Rules Matter
The enhanced rebate is temporary and is tied to specific dates.
For new homes purchased from a builder, Ontario guidance says the agreement of purchase and sale generally needs to be entered into on or after April 1, 2026 and on or before March 31, 2027. Construction or substantial renovation must begin on or before December 31, 2028 and be substantially completed on or before December 31, 2031.
For owner-built homes, including situations where an individual hires someone else to build a home on land they own or lease, Ontario guidance says construction or substantial renovation generally needs to begin on or after April 1, 2026 and on or before March 31, 2027, and be substantially completed on or before December 31, 2029.
This timing difference is important for custom home clients. A project’s eligibility may depend on when construction begins, when it is substantially completed, and how the construction agreement is structured.
How the Rebate Is Claimed
For a traditional new home purchase from a builder, purchasers are often encouraged to assign the rebate to the builder. This can allow the purchaser to benefit from a lower effective purchase price rather than paying the full HST amount and waiting to apply for the rebate directly.
CRA has indicated that updated rebate forms and guidance are being released to support the enhanced rebate program. Depending on timing and project structure, purchasers may either receive the benefit through the builder or may need to apply directly with CRA. CRA has indicated those forms are expected by mid-July 2026.
For owner-built homes, CRA has said more information on how to apply for the Ontario Enhanced New Housing Rebate will be provided when available.
This distinction matters for custom homes. If the client already owns the land and hires a builder to construct the home, the rebate process may be different than a standard purchase from a builder. Clients should speak with their accountant and lawyer before assuming the rebate will be credited directly through the construction contract.
What About Substantial Renovations?
The enhanced rebate may also apply to certain substantially renovated homes, not just brand-new homes.
However, “substantial renovation” has a specific meaning under the GST/HST rules. A cosmetic renovation, addition, or partial remodel may not qualify. Clients planning a major renovation should speak with their accountant or tax advisor to determine whether the project meets the applicable threshold.
What This Means for Homes By Hendriks Clients
For Homes By Hendriks clients, the enhanced HST rebate may create a meaningful planning opportunity for eligible new custom homes and certain substantial renovations.
It may help with:
- reducing the overall tax burden on a qualifying project;
- improving financing conversations with lenders;
- clarifying the true after-rebate cost of the home;
- helping clients understand how HST is treated in a custom build;
- creating more confidence before moving from design into construction.
However, the rebate should not be treated as automatic. Every project needs to be reviewed based on its own facts.
Before relying on the rebate, clients should confirm:
- whether the home will be used as a primary residence;
- whether the project is a new build or a qualifying substantial renovation;
- whether the home is being purchased from a builder or built on land the client already owns;
- the timing of the agreement, construction start, and substantial completion;
- the estimated value of the home;
- whether the rebate can be assigned or credited by the builder;
- whether the homeowner must apply directly;
- what CRA forms and documentation will be required.
Why This Should Be Discussed Early
The biggest mistake a homeowner can make is waiting until the end of the project to ask about HST rebate eligibility.
For a custom home, the structure of the agreement, the timing of construction, land ownership, occupancy, and documentation may all affect how the rebate is handled. These details should be discussed during the pre-construction and contract review stages, not after construction is complete.
At Homes By Hendriks, our role is to help clients understand the construction process clearly and connect the right professionals at the right time. We are not tax advisors, but we do believe clients should be aware of programs that may affect their project budget.
Before signing a construction agreement or finalizing financing, clients should speak with their accountant, lawyer, and lender to confirm how the enhanced HST rebate may apply to their specific project.
Final Thoughts
Ontario’s enhanced HST rebate is a positive step for new home construction and housing affordability. For eligible clients, it may provide significant savings and make the decision to build a new home more financially achievable.
Although the rebate is often discussed in the context of production housing, custom home clients should not assume they are excluded. If you are planning to build a new custom home, substantially renovate an existing home, or build on land you already own, it is worth reviewing whether the enhanced rebate may apply.
As always, the best approach is to plan early, ask the right questions, and make sure your construction, legal, accounting, and financing teams are aligned before the project begins.
Disclaimer
This article is intended for general information only and should not be relied on as legal, tax, accounting, or financial advice. HST rebate eligibility depends on the specific facts of each project, including ownership structure, occupancy, timing, home value, contract structure, and CRA requirements. Clients should confirm their eligibility and filing requirements with their lawyer, accountant, tax advisor, and lender before making financial decisions.
