Assignment of the GST Rebate is crucial to buyers who have a small down payment (high ratio mortgage) or just enough down payment to make the 20% down payment threshold to avoid paying mortgage default insurance.
Mortgage lenders will lend based on the purchase price plus net GST. They will not lend based on the rebate amount of GST added.
GST is paid in one of two ways.
- The client pays the full GST upfront on closing day and receives the GST rebate about 3 months later.
- The builder has the GST assigned.The client then pays the net GST upfront and never has to worry about funding the rebate until the cheque comes in the mail.
Builders vary in whether they have the GST assigned. In a few cases, I have asked realtors to require in the offer to purchase that the GST is assigned to the builder. I only ever asked a realtor to do this when I knew that the client would not be able to close without having the GST assigned.
Note that the rebate is applicable to purchase price of less than $450 000. And the amount of rebate at $440 000 is small at $630. If the purchase price is $350 000, then the rebate is significant at $6300. Obviously the amount of rebate will help you determine if you should ask for the GST to be assigned. I use the following calculator to determine the amount.