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Legal advice: Want your home HST rebate? You better actually live there

Q: I have recently purchased a condo that I am not living in but my sister ‘moved into.’ On final closing, the builder and its lawyer questioned if my sister was actually residing there. They required that we provide proof she had moved in. My aunt and uncle were actually living there and my sister was still at my parents’. The issue at hand was that we wanted to claim the HST rebate on new homes and the builder was being very problematic and aggressive about the proof. The HST rebate represented $24,000 we did not have to pay the builder and we were furious our lawyer wasn’t able to get them to agree with this. We had to close without the rebate and now we need to apply for that rebate from CRA which is going to take time and energy. How could we have avoided this?

A: Non-resident purchasers of condos are naturally assumed to not take possession of the condo and are purchasing it normally as an investment to either sell quickly or rent out. This means you are not eligible for the rebate. The problem lies in that a lot of investors over the past few years have basically lied (to their lawyers under oath) and said they were taking possession of the condo to get the rebate and now the government has clued in to this fraud. It checks to see if the unit is occupied by a close family member with regards to properly claiming the rebate. Furthermore, the CRA (Canada Revenue Agency) has found that the builder’s lawyers need to police this occupancy status. In your case, your aunt and uncle do not qualify as eligible close family so if they were living in the condo during your occupancy then you cannot claim the rebate. If it is your sister, then you should have proof of this and you can apply after the closing. Really, your lawyer is your representative but I will tell you there are a number of my clients who have been caught fraudulently claiming the rebate. We are not here for our unscrupulous clients to perpetrate fraud with the federal tax authority. If you qualify, you will eventually get the rebate.

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