GST New Housing Rebate allowed for laneway house on top of garage
The GST/HST New Housing Rebate is available to recover part of the GST/HST paid on constructing or substantially renovating a home. The amount of the rebate varies depending on the value of the completed home; for the federal rebate, it disappears once the home’s value exceeds $450,000. However, in Ontario, even for a more expensive home, the rebate is 6 of the 8 points of the Ontario 8% portion of the HST payable on the construction costs (or on the home), maximum $24,000.
In the recent Litman case, 2024 TCC 58, Mr. Litman built a “laneway house” on top of his garage at his home in Ottawa, for his mother-in-law to live in. He claimed the New Housing Rebate. The CRA denied the rebate on the grounds that he did not meet the test of “substantial renovation”, which requires gutting and rebuilding an existing home. Mr. Litman appealed to the Tax Court of Canada.
The Court allowed the appeal and granted the rebate. The “laneway house” qualified as a separate “residential complex”, even though it was part of the same property as Mr. Litman’s home. As a result, the rebate was available.