A decision by the Tax Court of Canada last month has muddied the waters about who is — and is not — entitled to the new-home owner’s HST rebate.
In recent years, Canada Revenue Agency (CRA) has been aggressively clawing back HST rebates of $24,000 or more from some buyers who received them on closing.
In those cases, a third party who is not a close relation is registered on title at the insistence of a mortgage lender when the buyers do not qualify for a mortgage based on their own credit.
The rebate will be allowed only if a child, grandchild, brother or sister, spouse or common-law partner is a registered owner, but does not live in the home with the principal owner.
But when a cousin, aunt, uncle, nephew, niece, friend or business associate is registered on title for mortgage purposes, even if they have only a 1 per cent share, none of the buyers can get the rebate.
CRA has always taken the position that all of the buyers must qualify, not just most of them.
That’s what happened in 1999 when Phil Davidson bought a duplex in Calgary from a builder, but the mortgage lender required his friend Carol Waterhouse to go on title. Davidson did not qualify for financing himself.