TLDR: Ontario’s enhanced HST rebate is worth up to $130,000, and most Toronto custom home clients will not see a dollar of it. Eligibility is capped at $1,850,000 of finished value with the land included, and our custom home projects finish between $2 million and $5 million. Full interior renovations and additions on lower-value properties are where this rebate actually lands, which is why the same project can qualify in Scarborough and fail in Rosedale. The rebate almost every one of our clients does collect is the older one, worth up to $16,080.
A client forwarded us a headline this summer about a $130,000 HST rebate and asked, reasonably, whether we had been sitting on good news. The honest answer took about ten minutes to explain, and it came down to a number most of the coverage skips: the rebate is measured against what your property is worth when the work is finished, not what you spent getting there.
That single detail decides almost every case we look at.
There are two rebates, and people keep merging them
The one our clients have always been able to claim is the Ontario new housing rebate. It applies to new builds and to substantial renovations, it has no deadline attached, and for our clients it maxes out at $16,080.
That figure is not arbitrary. The Canada Revenue Agency caps the owner-built Ontario rebate at $24,000 if you paid HST when you bought the land, and $16,080 if you did not. Our clients already own their property and bought it resale, so no HST was paid on the land, and $16,080 is the ceiling. The rebate works out to roughly 6% of construction spending until it hits that ceiling, which happens at about $268,000 of work. Every addition we build passes that mark, so the cap is the number, not the calculation.
The second rebate is the new one. Ontario’s enhanced new housing rebate provides up to $80,000 of the provincial portion of HST, and the Ontario New Home Affordability Payment adds up to $50,000 of the federal portion on top. That is where the $130,000 headline comes from. It is real, and it is genuinely large.
It also comes with three conditions that do most of the work:
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Construction has to begin between April 1, 2026 and March 31, 2027
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The project has to be substantially complete before 2030
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The fair market value of the finished property has to be under $1,850,000
The third one is where our clients run into trouble.
What most homeowners get wrong
The biggest misconception is that every renovation and every home building project will qualify for the enhanced program. Based on what our HST specialist has seen submitting these rebates so far, that is clearly not the case.
The rebate has to be worked backwards from the cap. Start with what the property is worth before the renovation, add what the work will do to that value, and check whether the finished number still lands under $1,850,000. The CRA counts the land in that figure and not just the building, which is what catches people out in the GTA. Skip that exercise and the cost is not theoretical. It is tens of thousands of dollars of rebate you were never going to receive.
There are neighbourhoods in Toronto that will not qualify on property value alone, before anyone has discussed scope. This rebate is really for the parts of Toronto where you can still buy a house for less than a million dollars.
One assumption worth clearing up separately: the first-time buyer rule does not apply here. That was the federal program announced in 2025. Ontario’s enhanced rebate carries no first-time buyer test, so families who have owned three homes are eligible on that front. They run into the value ceiling instead.
Why the same renovation qualifies in Scarborough and fails in Rosedale
This is the part worth understanding before you plan anything.
Because the cap applies to the finished property, the value of the house you already own determines how much work you can do before you cross the line. If you are doing a renovation project in Rosedale versus Scarborough, the starting value of the home is drastically different, and that difference decides whether your renovation costs push you over the $1.85 million threshold.
A Birch Cliff bungalow worth $900,000 leaves real room underneath the ceiling. A comparable house in Rosedale or Forest Hill is often above $1.85 million before anyone picks up a hammer, which means no amount of careful budgeting brings it back into range.
Run our own book through that filter and the picture is clear. Our custom home builds finish somewhere between $2 million and $5 million, so they are above the cap without exception. Our home additions finish between $1.5 million and $3 million, which means some of them land underneath it and many do not. The projects best positioned for this rebate are full interior renovations and additions in the neighbourhoods where we do most of our work, places like Cliffside, Birch Cliff and East York, rather than the high-value pockets people assume benefit most.
Whether your project qualifies comes down to how much of the existing house is being rebuilt and what the property is worth once the work is done. Send us your plans and we will tell you which rebate you are in line for and roughly what it is worth.
The 90% test, and the part that trips up additions
Both rebates use the same definition of a substantial renovation: at least 90% of the habitable area of the building that existed before the work has to be removed or replaced. Foundations, external walls, interior supporting walls, floors, roof and staircases are excluded from that count.
Two details matter more than the percentage.
The first is what “removed or replaced” means. Stripping walls to the studs and re-drywalling 90% of the house is not enough on its own. The CRA requires the walls together with either the ceilings or the floors across that same area. Heating, electrical and plumbing systems do not need replacing.
The second catches people planning additions. The addition itself does not count toward the 90%. The test looks only at the house that was already there. The CRA’s own worked example is a 2,000 square foot bungalow with a 300 square foot bedroom added, where the addition is ignored entirely and the only question is whether 90% of the original 2,000 square feet was substantially renovated. Pass that test and the HST on the addition becomes eligible too. Fail it, and a very large addition can still leave you with nothing.
That is why a gut renovation with an addition tends to work and a rear extension that leaves the front half of the house intact tends not to. On our Midland Avenue project every area of the home was redone, including the basement. From the inside, it acts as a new home, and it cleared the bar comfortably.
What “construction begins” actually means
For the enhanced rebate, the clock starts at excavation. The CRA’s published example follows a buyer who bought bare land in October 2024, received a building permit in February 2025, and began excavation on June 1, 2025. The CRA treats construction as having begun in June, on the excavation date. Permits, drawings and design work do not start it.
Anyone hoping to use this rebate needs to be in the ground before March 31, 2027. Given how long approvals take in Toronto, that is a decision being made now, not next spring.
How we handle it
We are not tax advisors and we do not file these claims. We refer that work to an HST specialist, and the fee runs around $2,400, sometimes more on complex applications and likely more on enhanced ones.
Homeowners are allowed to file themselves, and we suggest they do not. There are nuances in the application process that only a seasoned specialist knows, and those nuances can be the difference between collecting the money and collecting nothing. It is far easier to hand the submission to someone who understands the process. Against a $16,080 rebate, a $2,400 fee is roughly 15%, which is a straightforward trade against the risk of a failed claim.
Our part is timing and records. We flag the rebate during pre-construction rather than after, because the scope decisions that determine eligibility get made on paper long before anyone is on site. We help clients start the process once their project passes 90% complete. And we tell everyone the same thing from day one: keep all your invoices. Owner-built claims are built from the actual HST paid on real invoices, so a missing pile of paperwork is a missing rebate.
One more piece of the enhanced program is worth planning around. Qualifying requires an appraisal to establish fair market value at completion, which means you do not find out for certain whether you cleared the cap until the work is done.
Never budget the rebate into the build
Clients ask whether they can count the rebate toward the project cost. The answer is no, every time.
The money does not arrive until roughly four to six weeks after the project is finished, and that timeline reflects the older rebate. The CRA has said processing for enhanced claims does not begin until after system changes land in the fall of 2026, with delays expected. The rebate should never fund part of the build. It should be a welcomed deposit into your bank account once the project is completed.
Key Takeaways
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The enhanced rebate is capped at $1,850,000 of finished property value, land included, which excludes every custom home we build and many of our additions.
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The rebate almost all of our clients collect is the older Ontario new housing rebate, worth up to $16,080 because no HST was paid on their land.
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There is no first-time buyer requirement on Ontario’s enhanced rebate. The value ceiling is the real barrier, not your ownership history.
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The starting value of your house determines your headroom, so the same renovation can qualify in Scarborough and fail in Rosedale.
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The 90% test measures the existing house only. An addition is excluded from the count but becomes eligible if the existing house passes.
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Construction has to begin by March 31, 2027, and the clock starts at excavation, not at permit issuance.
Frequently Asked Questions
Does a home addition qualify for the HST rebate?
It can, but not because of the addition. The test looks at the house that was already there and asks whether at least 90% of its habitable area was removed or replaced, with the addition excluded from that calculation. If the existing house clears the bar, the HST on the addition is eligible too. A large addition attached to a mostly untouched house generally does not qualify.
Can I get the $130,000 rebate on a Toronto custom home?
Almost certainly not. The enhanced rebate stops at $1,850,000 of finished value including the land, and custom homes we build in Toronto finish between $2 million and $5 million. Those projects fall back to the Ontario new housing rebate of up to $16,080.
Should I file the rebate application myself?
You are allowed to, and we recommend against it. The application has nuances that decide whether a claim is paid, and a specialist typically charges around $2,400 to handle it. Keep every invoice from the first day of the project, because the claim is built from the HST you actually paid.
Talk to us before you finalize the scope
Rebate eligibility is decided by decisions made in pre-construction: how much of the existing house you are touching, and what the property will be worth when the work is done. Both are far easier to plan around at the drawing stage than to fix later.
If you are planning a 2027 build or renovation, book a call and we will walk you through which rebate applies to your property and what it is likely worth before you build a budget around it.
