What Is the HST Rebate on Substantial Renovations?
Most Ontario homeowners know that the 13% Harmonized Sales Tax (HST) applies to construction labour and many materials. What very few know is that if your renovation qualifies as a "substantial renovation" under the Excise Tax Act, you may be entitled to a partial rebate of the HST you paid — using CRA Form GST190, the GST/HST New Housing Rebate Application for Owner-Built Houses.
This rebate is structured the same way as the rebate available to someone who builds a brand new home — because the Canada Revenue Agency treats a qualifying substantial renovation as equivalent to new construction. The rebate can be worth up to 36% of the federal (GST) component of HST paid, subject to a sliding scale based on the fair market value of the home after renovation. The maximum rebate amount has been $6,300 on the federal portion, with Ontario adding its own provincial new housing rebate of up to $24,000 (36% of the Ontario portion of HST).
This is not a grant. It does not come from a program you apply to in advance. You complete the work, pay the HST, and then claim the rebate on your tax forms. But for large renovations, the amount recovered can be significant — in the thousands of dollars — and most eligible homeowners never claim it.
What Is a "Substantial Renovation"?
The CRA definition of a substantial renovation is very specific and demanding. A renovation qualifies as substantial when 90% or more of the interior of the existing habitable areas of the building are removed or replaced. This is sometimes called the "90% rule."
In practical terms, this means a gut renovation: removing walls down to studs, replacing all flooring, all ceilings, all interior finishes, all plumbing rough-in, and all electrical rough-in throughout the entire home (excluding the foundation, exterior walls, and roof structure, which are excluded from the calculation).
What counts toward the 90%: Interior walls, flooring, ceilings, insulation, plumbing, electrical, windows and doors, HVAC, and kitchen and bathroom fixtures throughout the home.
What is excluded from the calculation: Foundation, exterior walls, interior supporting walls (load-bearing), roof, and staircases. These are not counted in the 90% threshold.
The key word is "habitable areas." Unfinished basements may or may not be included depending on their existing state. Garages are generally excluded.
Regular Renovation vs. Substantial Renovation
The distinction matters enormously for HST rebate eligibility:
- Regular renovation: Adding a bathroom, finishing a basement, replacing a kitchen, upgrading insulation — these are common renovations that do not meet the 90% threshold and are not eligible for the substantial renovation rebate. HST is paid and not recoverable through this mechanism.
- Substantial renovation: A complete gut of the entire interior — studs-out renovation of the whole house — that replaces essentially all interior elements throughout the entire habitable space. This is a significant undertaking that is relatively rare but does occur, particularly in Renfrew County where older farmhouses are sometimes stripped to the structure and rebuilt from the inside out.
Even a large renovation that covers 80% of the interior does not qualify. The 90% threshold is a hard line. Partial-home renovations, no matter how extensive, do not qualify unless the entire habitable interior meets the threshold.
Eligibility Conditions
To qualify for the rebate under Form GST190, all of the following conditions must be met:
- Primary residence: The home must be your primary place of residence (or that of a qualifying relative). Investment properties and vacation properties do not qualify for the owner-built rebate stream.
- 90% threshold met: The renovation must meet the CRA's substantial renovation test across the entire habitable interior.
- Owner-builder: You (the individual) are the one contracting the work — not a GST/HST registrant building for resale. If a developer performs the renovation and sells the completed home, different GST/HST rules apply.
- Fair market value cap: The rebate phases out as the fair market value of the renovated home increases. The federal rebate applies at full rate for homes valued at $350,000 or less after renovation, phases out between $350,000 and $450,000, and is zero for homes valued above $450,000. The Ontario provincial portion has its own threshold. Given that many Renfrew County rural properties fall below these thresholds, this rebate can be fully available here when it is not in higher-cost urban markets.
- Application deadline: The rebate must be filed within two years of the later of: the day the renovation is substantially completed, or the day you first occupied the home after the renovation.
How to Apply — CRA Form GST190
The rebate is claimed using CRA Form GST190 — GST/HST New Housing Rebate Application for Owner-Built Houses. This form is available from the Canada Revenue Agency website and is submitted directly to CRA, not through your income tax return.
You will need to document:
- All invoices and receipts for materials and labour where HST was charged
- Evidence of the extent of the renovation (photos, contractor scope of work, building permits)
- Proof that the property is your primary residence
- The fair market value of the home after substantial completion
The official CRA guidance on new housing rebates is available at the CRA New Housing Rebates page. Given the complexity of this rebate and the documentation required, most applicants benefit significantly from professional guidance — either from a CPA with GST/HST experience or a tax professional who regularly handles construction and renovation files.
A Note for Renfrew County Homeowners
Older farmhouses and rural properties in Renfrew County are among the most likely candidates for true substantial renovations — homes where the structure is sound but the entire interior needs to be rebuilt to modern standards. If you are undertaking a project of that scale, this rebate is worth investigating carefully before you begin, not after. Claiming it requires pre-planning: keeping every HST receipt from every supplier and contractor from day one.
Building permits from local municipalities (Pembroke, Renfrew, Petawawa, Arnprior, or the relevant township) will be required for structural and mechanical work and serve as important supporting documentation for CRA. Always pull proper permits — they protect you legally and support your rebate claim.