Rebates on the GST on renovated homes in BC
GST ON RENOVATED HOMES IN BRITISH COLUMBIA
GST on Renovated Homes in British Columbia
If you are considering a major substantial renovation, whether you live in a townhome, condo, or house – you may be eligible for the new housing GST rebate. Find out how in our blog. If are buying a new home, check out our related BLOG.
Author: Meryl Hamdillah is a REALTOR with Sutton WestCoast Group and is an active community writer in Tri-Cities and Vancouver. If you are interested in a real estate or community topic in Tri-Cities or Metro Vancouver, feel free to call or text 604-307-9506
Thinking about renovating? Find out whether you are eligible for the GST rebate?
Are you someone who’s not afraid of taking on major renovations? Are you considering to upgrade from a townhome but you don’t want to pay premium price of a brand new home? Or perhaps you’ve bought over your parents’ home that’s still stuck in the nineties and you’ve decided that it’s well over due for a major update? Well good news! There is a new housing rebate available for substantially renovated homes. This blog will help you understand what is considered a substantial renovation according to the Canada Revenue Agency so YOU can take advantage of the new housing rebate regardless of whether you own a condo, townhome or house. Who doesn’t love saving money?!?
I recently renovated my home. Am I eligible for the GST rebate?
Just like you’re able to get a GST rebate on the GST paid on a brand new home, you ‘re also able to get GST rebate on GST paid to renovate your home. The key to whether you are eligible to claim a GST rebate is that your home must be considered to have been “Substantially renovated”.
What is a substantially renovated home?
A “substantially renovated” home is defined as one that has undergone a major renovation to the point that the physical and sometimes the functional aspect of the existing home is not the same as it was prior to the renovation. For example, a part of your renovation project is to breakdown the wall separating your kitchen and dining area and re-purpose your dining area as part of your newly renovated kitchen. A major addition to an existing home like converting an unfinished basement to a fully finished legal basement suite may also be considered as part of a substantially renovated home. Such a home is treated like brand new home and as a result, a new housing Rebate may be claimed on the cost of the renovation.
How do I determine whether my newly renovated home meets the definition of a substantially renovated home?
There are 2 ways: The 90% test and Meeting 3 Key elements
A quick method is the 90% test. According to Canada Revenue Agency, a good test to see whether your newly renovated home will meet this definition is to ask yourself: “Will ninety percent (90%) of the total livable space in my existing home be renovated?” This can be measured in terms of the number of rooms renovated compared to the total rooms in the house or perhaps the square footage of the total floor and wall space of the home such as the kitchen, living, dining and bedrooms. It does not include “the garage, hallways, parking areas, crawl spaces, or any areas set aside for the placement of equipment for the heating of, or the supply of water, gas, or electricity to, the home”
Using The 90% Test
Whether you qualify for a GST rebate depends both on the purchase price and on the use of the property – whether it is used as a principal residence or a rental property. This blog will focus on GST rebates available on new homes that are used as a principal residence.
Meeting The 3 Key elements
In addition to using the 90% test, another way to determine whether your newly renovated home meets the definition of substantial renovation is to assess whether the newly renovated homes meets the following 3 key elements.
I have a major addition to my existing home. Do I qualify for the new housing rebate?
It depends. Although the 90% test is on whether the existing home is 90% renovated, there is consideration for cases in which the newly renovated home including the major addition is significant enough to change the physical and functional aspects of the existing home. The guidelines to determine if you qualify in this scenario are: 1) The addition should at least double the size (in terms of floor space, for example) of the habitable areas of the existing residence. 2) The existing residence must have both physical and functional changes. For more information, please visit the section on major additions on the Canada Revenue Agency site.
How do I apply for a rebate for GST on renovated homes in BC?
Once you’ve determined whether your renovation project meets the definition of a substantially renovated home, and you are eligible to claim the new housing GST rebate, it’s important that you keep a copy of all your receipts and agreements showing the GST paid on the costs of renovation.