Ontario announced on Wednesday that it will remove the full eight per cent provincial portion of the Harmonized Sales Tax (HST) on qualifying new purpose-built rental housing in order to get more rental homes built across the province.
“There has never been a greater need to get rental housing built across the province. This is why our government is taking steps to tackle the housing crisis so that all Ontarians can have an affordable place to live,” Finance Minister Peter Bethlenfalvy said in a statement.
“Tomorrow, I will provide an update on our plan that will continue with our government’s targeted, responsible approach so we have the flexibility needed to build Ontario and address the uncertainty of today while laying a strong fiscal foundation for future generations,” Bethlenfalvy added.
The removal of the provincial portion of the HST would apply to new purpose-built rental housing such as apartment buildings, student housing and senior residences built specifically for long-term rental accommodation, that meet the criteria. The enhanced rebate would apply to qualifying projects that begin construction between September 14, 2023 and December 31, 2030, and complete construction by December 31, 2035.
Currently, the Ontario HST New Residential Rental Property Rebate is equal to 75 per cent of the provincial portion of the HST paid, up to a maximum rebate of $24,000. The enhanced rebate would be equal to 100 per cent of the provincial portion of the HST, with no maximum rebate amount.
In the example of a two-bedroom rental unit valued at $500,000, the enhanced Ontario HST New Residential Rental Property Rebate would deliver $40,000 in provincial tax relief. When combined with the enhanced federal GST New Residential Rental Property Rebate, this would amount to $65,000 in tax relief.
To qualify for the enhanced HST New Residential Rental Property Rebate, new residential units must be in buildings with at least four private apartment units or 10 private rooms or suites, and have at least 90 per cent of residential units designated for long-term rental.
