How newly reduced GST will apply to your new home purchase

On October 30, 2007 the federal government announced a reduction in GST (Goods and Services Tax) from 6% to 5%. GST only applies to sales of newly constructed and substantially renovated homes. GST is not applied to the purchase price of resale homes. If you are in the process of buying a home where GST is applicable, use the following information to figure out if you will be eligible for the reduced rate of GST on your home purchase:

• The 6% rate will apply if ownership of the property, or possession of it under the agreement of purchase and sale, is transferred to the buyer before January 1, 2008.
  
  
• The 5 per cent rate will apply if both ownership of the property and possession of it under the agreement are transferred to the buyer on or after January 1, 2008.
  
  
• Agreements of Purchase and Sale entered into on or before October 30, 2007 but after May 2, 2006, the 6 per cent rate will apply. (You will be entitled to file a claim directly with the Canada Revenue Agency to be paid a Transitional Rebate that reflects the GST rate reduction to 5 per cent, net of any corresponding rebate adjustment.)
  
  
• Agreements of Purchase and Sale entered into on or before May 2, 2006, the 7% rate will apply. (You will be entitled to file a claim directly with the CRA to be paid a Transitional Rebate that reflects the GST rate reduction to 5 per cent, net of any corresponding rebate adjustment.)

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