11/09/2023
On November 1, the Government of Ontario announced that it is removing the full provincial amount of Harmonized Sales Tax (HST) for new rental developments.
The measure will apply to new purpose-built rental housing such as apartment buildings, student housing and senior residences built specifically for long-term rental accommodation, that meet the criteria.
The government says the enhanced rebate would apply to qualifying projects that begin construction between September 14, 2023, and December 31, 2030, and complete construction by December 31, 2035.
To be eligible for the rebate, new residential units must be in buildings with at least four private apartment units or 10 private rooms or suites and have at least 90% of residential units designated for long-term rental.
This is the latest in a series of steps Ontario has been taking to improve affordability following the release of a Housing Action Plan in 2022.
There is currently a New Residential Property Rebate in Ontario but it is only equal to 75% of the provincial portion of HST, up to a maximum amount of $24,000. The newly proposed rebate will be 100% of provincial HST, with no maximum amount.
For example, a two-bedroom rental unit valued at $500,000 would get a provincial tax rebate of $40,000. When combined with the federal rebate in the recent Affordability and Housing Act, worth up to $25,000, this means developers in Ontario could benefit from up to $65,000 in tax rebates.
To help ease some of the pressure on existing renters, Ontario also capped annual rent increases below the rate of inflation. However, this only applies to units that were built before November 2018. Also, even in older units, if a tenant moves out the landlord may raise the rent as high as they like for the next tenant’s first year.
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