Riverside South, Ottawa
New build and first home tax questions in Riverside South
Riverside South is being built, street by street, and almost everyone here bought from a builder rather than from a previous owner. That single fact drives the tax questions. A new home carries GST and HST where a resale does not, the rebate that softens it was almost certainly credited to you in the purchase price rather than claimed by you afterwards, and the condition attached to that rebate follows you for as long as the CRA has to look at it. Add the first purchase itself, the registered plans people used for the down payment, and a move that may or may not qualify as deductible, and the first return after possession has more moving parts than any return that follows it.
Why Riverside South is its own case
The new housing rebate is the piece that goes wrong. On a builder sale the buyer signs the rebate over to the builder, the builder credits it against the price, and the buyer never files anything. That feels like it is finished, and it is not. The rebate is conditional on the property being acquired as the primary place of residence of the buyer or a qualifying relation, and the CRA reviews these years after closing. If the plan changed, if the home was rented out instead, or if it was resold before anyone really lived in it, the CRA does not chase the builder. It assesses the buyer for the amount that was credited, with interest.
There is a route for a genuine change of plan. Where a new home is bought and rented to a tenant as a place of residence, a separate rental rebate exists, but it is claimed by the purchaser directly rather than through the builder, it has its own filing deadline, and it is not automatic. Missing that deadline is the difference between recovering most of the tax and recovering none of it. Assignment sales, which are common while a community is still being built, have their own treatment, and the assignment of a purchase agreement for new housing is itself generally subject to tax.
The rest is more forgiving. Ottawa has no municipal land transfer tax, so buyers here pay the provincial one only, with a first-time buyer refund available against it. The registered plans built for down payments each have their own repayment or non-repayment mechanics. And moving expenses are frequently claimed when they should not be, because the test is about distance to work, not about the cost of the move.
The work, as it applies here
Tax Expertise
The first return after possession done once, properly: the rebate position confirmed against what the builder actually credited, first-time buyer amounts claimed, registered plan withdrawals reported and their repayment schedules recorded so year two is not a scramble.
Strategic Planning
Before closing, a review of what happens if plans change. Renting the new home instead of occupying it, assigning the agreement, or closing later than expected each have a sales tax consequence that is far cheaper to plan than to unwind.
Questions from Riverside South
- The builder said the new housing rebate was already in my price. Is there anything left for me to do?
- Not if you occupy the home as your primary place of residence, but understand what you signed. You assigned the rebate to the builder and certified the occupancy condition, and the CRA can review that certification long after closing. Keep the statement of adjustments and the rebate application from your closing package. If the CRA ever questions it, the evidence it wants is the ordinary evidence of living there: driver's licence, utility accounts, insurance, mail and the date each began.
- Our plans changed and we are renting the new house out instead of moving in. What happens to the rebate?
- The rebate that was credited to you becomes repayable, because the primary residence condition was not met. There is a different rebate for new residential rental property, available where the home is leased to a tenant for use as a place of residence, but it has to be claimed by you directly, on its own application, within its own deadline running from closing. The sequence to get right is that the credited rebate is dealt with and the rental rebate is filed on time. Discovering this two years later usually means only one of those is still fixable.
- Do we pay a municipal land transfer tax in Ottawa on top of the provincial one?
- No. Toronto is the only Ontario municipality that levies its own land transfer tax. Buyers in Ottawa pay the provincial tax alone, calculated on the purchase price in brackets, with a refund available to first-time buyers up to a maximum. If two people buy together and only one is a first-time buyer, the refund is generally limited to that person's interest in the property. On a new build it is normally handled by your lawyer at closing rather than claimed later, so it is worth confirming it was applied.
- I moved from another part of Ottawa to Riverside South for a new job. Can I deduct the move?
- Probably not, and the reason is the way the test is built. Moving expenses require that your new home be at least 40 kilometres closer to the new work location than your old home was, measured by the shortest normal route. A move within the city almost never clears 40 kilometres of improvement. The deduction is also limited to income earned at the new location, so it cannot create a refund out of nothing. Where it does apply, it covers more than people expect, including the land transfer tax on the new home and up to fifteen days of temporary accommodation.
- Can my spouse and I each use the Home Buyers' Plan and the FHSA for the same purchase?
- Yes, if you each qualify. The Home Buyers' Plan withdrawal limit is per person, and each of you repays your own withdrawal on your own schedule, beginning after a deferral period and continuing over the repayment term. A missed instalment is not a penalty, it is simply added to your income for that year. The first home savings account works differently: qualifying withdrawals are not repaid at all. Where both are used, the order of contributions and the timing of opening the accounts matter, because the FHSA needs to have been open before the withdrawal is made.
- We are thinking of selling before we close because prices moved. Is that just a capital gain?
- Do not assume so. Selling your rights under a purchase agreement before closing is an assignment, and assignments of new residential housing agreements are generally taxable supplies, so sales tax can apply to the assignment amount. Beyond that, the CRA looks at intention, and a property bought and disposed of quickly can be treated as inventory rather than capital, making the entire profit ordinary income instead of a partly taxed gain. The property flipping rules can also deem a gain to be business income where a residential property is held under twelve months without a qualifying life event. This is a conversation to have before the assignment is signed.