Home Rebates and Buyer Incentives
Author: Tracy Ruddell
After months of Real Estate news focused on how it's getting tougher to secure a mortgage with Canada's new mortgage rules and the agony of bidding wars with a shortage of houses for sale in Toronto, we thought we'd take a breath and remind both first time buyers and current homeowners of the various rebates available in Ontario to lighten the financial load, just a little.
Whether you're looking for help with a down payment or planning on making home improvements, here’s a breakdown of the various Federal and Provincial home rebate programs that homeowners and buyers may be eligible for.
Both the Federal and Provincial Governments offer Ontario buyers various incentives to purchase a home. Rebates are available for those who purchase a new build home along with incentives for first time buyers and for some buyers who face a challenging move financially due to unforeseen life changes.
First Time Home Buyer’s Tax Credit
If you’re a first time buyer, whether you purchase a freehold property or a condominium, you may be eligible for the Federal Government’s first time home buyer’s tax credit. You can claim up to $5,000 tax free as money that went towards the purchase of your home. To qualify, neither you nor your spouse or common-law partner (if you're purchasing with a partner) can have owned a home that you lived in within the last four years. If you owned a home recently as an income property (that you did not live in) or owned a home longer than four years ago (and sold it a minimum of four years ago and haven't owned since), you may still be eligible.
As well, buyers who are purchasing a property that is more suitable for them or their family members due to a disability may be able to qualify for the Home Buyer’s Tax Credit even if they're not a first time buyer, providing they also qualify for the Disability Tax Credit (see below).
More information on the First Time Home Buyer’s Tax Credit is available on the Canada Revenue Agency’s (CRA) website.
GST/HST New Home Rebate
In Ontario, buyers of new build homes and condos – or substantially renovated homes, to the extent that they could be considered "new" – have to pay 13% Harmonized Sales Tax (HST) but may be eligible for a rebate on a portion of that tax.
For the Federal portion (which represents 5%), buyers can receive up to 36% of that back but if the purchase price is $450,000 or above, you can't claim anything from the Federal portion. For the Provincial portion (which in Ontario is 8%), buyers can claim 75% of that portion of the tax back, up to a maximum of $24,000. Buyers of homes priced $450,000 & up can still claim the Provincial tax credit but it's maxed out at that $24,000 regardless of how high your purchase price goes and how much tax you paid.
A purchaser gets the GST/HST rebate in one of two ways:
1) the builder may pass the rebate onto you directly by either lowering the sales price / remaining amount owed OR sending you the rebate as a separate credit (and they handle the rebate application themselves), or
2) you apply directly through the Canada Revenue Agency (CRA) for the rebate. You have two years from the "base date" to apply; the base date is the date that the construction or renovation is considered to be substantially complete.
Make sure to ask your builder before signing any contracts how they will handle the HST rebate. Also, note that you have to be living in the house or condo unit (it can't be an income property) in order to qualify.
And remember, if you're considering buying a pre-construction home, bring your own Toronto REALTOR® to the table. It won't cost you any more to do so and it could save you thousands through tougher price negotiations, not to mention saving you potential headaches by having an expert who's on your side walk you through the contract in detail. Developer contracts are notorious for being riddled with hidden fees and loopholes that can catch unsuspecting buyers unawares (and out-of-pocket).
More information on the GST/HST New Housing Rebate is available on the CRA website.
Disability Tax Credit
If you're buying a new home to accommodate a disability and you qualify for the disability tax credit, you can apply for the above Home Buyers Tax Credit (HBTC) without meeting the definition of a first-time buyer. More information on the HBTC as it relates to disability is available on the CRA’s website.
Home Buyer’s Plan
While not a rebate, the Home Buyer’s Plan (HBP) is worth mentioning as it’s key to helping many first time buyers get a foot on the property ladder as well as helping buyers in need of a new home due to a sudden or unplanned turn in circumstances (for example divorce, disability, etc.) make the move more financially-viable.
The HBP is a program through the Federal Government that allows first time buyers the ability to borrow funds from their Registered Retirement Savings Plans to put towards a down payment on a home, up to a maximum of $25,000. Buyers then have 15 years to pay back the funds and re-build their RRSPs but they must start paying it back in year two (the year after purchasing their home).
Buyers who find themselves having to move for unexpected reasons may also qualify. This includes divorce, having to buy a more accessible home do to personal disability or because you’re a caregiver for a disabled family member or if you have to move out of province for a job.
More information on the Home Buyer’s Plan is available on the CRA’s website.
saveONenergy is a program offered by the Independent Electricity System Operator (IESO) and delivered through your local utilities. The IESO is an independent, not-for-profit, responsible for meeting the province’s energy needs today, while planning for a sustainable future. Through Ontario’s various utility companies, the IESO provides home owners with up to $5,000 in tax-free rebates for home energy improvements through their program called saveONenergy. Increasing your energy efficiency includes a range of activities from installing a new, energy-efficient furnace or air conditioner to small improvements such as weather-stripping your doors.
Renovations and improvements which may be eligible include the installation of energy star rated appliances, new windows and doors that provide better wind and weather proofing, a high-efficiency furnace, air conditioner, insulation, solar panels, tankless hot water heater and more. They also offer multiple, print-at-home coupons for things like LED lightbulbs, energy star light fixtures and fans, programmable thermostats, dimmers and programmable switches, power bars, weatherstripping, clothes lines and more, redeemable at many major home and hardware stores such as Home Depot, Home Hardware, Lowes, Canadian Tire and more.
SaveONenergy includes both specific heating & cooling rebates as well as an overall energy effiency improvement rebate - the higher your energy improvement score, the higher the rebate you will receive. The rebates are as follows:
Heating & Cooling Rebates
Ontario consumers can receive an energy rebate of up to $250 for replacing an old furnace with a new, high-efficiency model and up to $400 for the installation of a new, high-efficiency air conditioner. For our local readers in the Toronto area, more information is available on both the HydroOne and Toronto Hydro websites. Readers outside of Toronto but still within the province of Ontario should check with their local electricity provider; a full list of Ontario electricity providers is available here.
For builders, Toronto Hydro also offers an incentive of $15/fixture to install energy star certified fixtures in new residential developments, whether high-rise or low-rise. Builders can learn more about Toronto Hydro construction incentives on their website.
Home Energy Conservation Rebate
If you’re making home energy improvements, you may qualify for a sizeable rebate by having a qualified professional conduct a before and after home energy audit for you. You apply for the rebate through your local provider. For our readers in Toronto, Peel, Durham Region, Ottawa, York Municipalities and the Niagara Region this is Enbridge Gas. For readers in communities in northern, southwestern and eastern Ontario, you're likely with Union Gas.
Enbridge offers up to $1,000 for achieving a score of 15-24% in home energy improvements, up to $1,600 for a score of 25%-49% improvement and up to $2,100 for an energy savings score of greater than 50%. Eligible energy-related home improvements include the purchase and installation of a new high-efficiency gas furnace, boiler and/or water heater, better attic and wall insulation, new windows and improved door seals, and more.
To qualify, you must use one of their approved Certified Energy Auditors (CEAs) to conduct the required before and after energy audits which will give you your current score and, when the improvements are complete, your new, improved energy score. The total, maximum rebates listed above includes up to $150 back towards your first energy audit and up to $350 for the final audit. More information on the Enbridge Gas Home Energy Rebates along with a list of approved auditors is available on the program’s website called “Know Your Energy Score”.
Enbridge is also offering up to $100 in the form of a bill credit for the purchase and installation of a smart home thermostat (if you currently have a traditional thermostat installed).
Union Gas doesn't break the rebates down quite in this way, stating consumers are eligible for up to $5,000 in energy-related home improvement rebates (ala saveONenergy) but you can bet the qualification parameters are the same or similar to Enbridge's given that it's all under the same provincial program. More information on the Union Gas Home Renovation Rebates available on their website.
For more information on heating, cooling and overall home energy rebates, visit the SaveONenergy website. Note that this website is a good one-stop-shop for learning about the various rebates available but they are administered through your local utility companies. Generally, the contractor you hire to install a new furnace or air conditioner, for example, or to perform the home energy audit, will walk you through the application process but if you have any doubt or want to know your potential savings before hiring a contractor (to budget crunch what you can afford), we advise that you contact both your local electricity provider and your gas provider directly.
Ontario Electricity Support Program
This is a relatively new Provincial program that assists low-income individuals and families in affording energy bills. If you qualify, you’ll receive a credit on your bill. The amount of the credit depends on the number of people in your household and your combined household income. To find out if you qualify and how to apply, visit the Ontario Electricity Support Program (OESP) section on the Ministry of Energy’s website.
Enbridge Winterproofing Program
Enbridge is helping low-income customers lower their energy costs and make their homes more comfortable through their Winterproofing program, free to all qualifying households. Free improvements include new insulation and draft proofing. More information on the Enbridge Gas Distribution Home Winterproofing Program available on their website.
Basement Flooding Protection Subsidy
The City of Toronto offers incentives for home owners to protect their properties from flooding. You may be eligible for up to $3,400 if you install flood protection devices such as a backwater valve and/or sump pump and for pipe severance and capping of the home’s storm sewer or external weeping tile connection.
Most plumbers licensed by the City of Toronto will guide you through the process and may even arrange for the City inspection on your behalf; ask for details before proceeding with installation. More information on the Basement Flooding Protection Subsidy is available on the City of Toronto’s website.
Please note: while we strive to keep this blog post up-to-date with the latest incentives and rebates, home rebate programs are subject to change. Please contact the appropriate City Department, Ministry or utility company directly for more details on any of the above programs.
Lead Image: Saving for buying by Singkham from Shutterstock.