Be prepared when applying for any tax rebate‏

New home buyers and owners renovating their own homes continue to be confused about the HST rebate.

There are different rules governing this tax depending on your plan. You may be moving into the home as your primary residence, you may be renovating an existing home, or you may plan to rent it out.

When you buy a new home or condominium and plan to make it your primary residence, the rebate is usually included in the price. So if you paid $400,000, the real price including the tax is closer to $427,000. In your agreement with the builder, you likely agreed to transfer your rebate to him, bringing your price down to $400,000.

If you do not move in on closing, you will have to pay the full amount. If you decide to rent out your new home, you are still eligible for the HST rebate, under a different program, called the HST new rental residential rebate.

If you substantially renovated your own home and paid the contractors yourself, you may also be entitled to up to $16,000 in HST rebates.

In all cases, you have up to two years from closing your new home or completing your renovations to apply.

Figuring out what to do can be tough, says Michael Beallor of Rebate4U.ca, a company that helps homeowners collect the HST rebate. He says it can be difficult for the average person to understand what the Canada Revenue Agency needs and to deliver the documents supporting a claim for the HST rebate. Beallor does not charge a fee up front, but collects when the rebate is paid. Another company that provide the same service is Custom Business Solutions. Lawyers and accountants also provide this service.

Some buyers intend to move in when they buy a condominium, but when it is ready years later, their circumstances have changed and so they sell. In these cases, the CRA typically says the buyers are no longer entitled to the HST rebate.

But there is a way to fight that, says Toronto author and tax lawyer David Sherman.

Sherman says if you can show that you intended to make the house or condo your primary residence, but that circumstances changed, requiring you to sell, then you may be able to fight a reassessment. You may have relocated for work, there may have been a death in the family, or a child may have intended to use the unit for university but then was accepted at a university out of town.

What is very important is that you have the right documents to support your claim when dealing with the Canada Revenue Agency. You may need advice from a lawyer or accountant.

Speaking of rebates, my column of Feb. 28 was in part about first-time buyer rebates related to the Ontario Land Transfer Tax. Scott Blodgett with the Ministry of Finance, clarified an example used in the column which referred to a situation where a couple marry and buy a house. One spouse has already claimed the rebate but sold the home before they got married and one has never owned a house.

Blodgett says the spouse who has never owned a home can still claim 100 per cent of the land transfer tax rebate, even if they do not take 100 per cent ownership of the property. This also applies to the Toronto Land transfer Tax rebate. If anyone has overpaid land transfer taxes, you have eighteen months to apply to the Ministry of Finance for an overpayment.

By: Mark Weisleder