Ontario is running a temporary HST rebate that can hand you back up to 100% of the HST on a new rental build. If you’re planning a laneway suite, a garden suite, or a multiplex conversion in Toronto, this is worth understanding before you break ground.
But the rebate has a timing window, a value cap, and a threshold where the math can actually work against you. Here’s exactly how it works, and where it can backfire.
What Changed With Ontario’s HST Rebate
This rebate only applies to new construction and substantial renovation. If you’re buying a resale multiplex, you’re not paying HST on that purchase at all, so none of this affects you.
Before this enhancement, a new rental unit still qualified for a partial HST rebate, just a portion of what you paid out. A typical laneway suite or garden suite build would get back around 60% of its HST.
Right now, that changes. If construction or substantial renovation starts between April 1, 2026 and March 31, 2027, you can most likely get 100% of your HST back. That timing window is a real reason to push up your build schedule if you’re already planning a laneway suite or garden suite.
How the Rebate Is Actually Calculated
The rebate scales with the appraised value of the unit, not a flat number across the board.
You get 100% of your HST back up to an appraised value of $1 million, worth up to $130,000 rebated at that value. That’s why most laneway and garden suites fit comfortably inside this range. Anything from $1 million to $1.5 million is still capped at that same $130,000.
Between $1.5 million and $1.85 million, the rebate slides down. Past $1.85 million, it caps at just $24,000, no matter how high the value climbs from there.
Where the Rebate Can Backfire
Here’s where this stops making sense, and it usually comes down to higher valued properties.
Say you bought a house for $1 million resale, so you didn’t pay HST on the purchase. You substantially renovated it for $500,000 to turn it into a rental, paying out $65,000 in HST along the way, and it’s now worth $2 million.
When you do the self assessment after the renovation, you actually owe HST on the full appraised value, which comes out to $260,000. After accounting for what you already paid, you owe the government $195,000 more. Since the property is valued over $1.85 million, you’d only get $24,000 back in rebate. On a renovation like this, you could end up owing the government more money than the rebate ever gives back.
Know Before You Build
There’s also a separate, permanent 100% rebate available if you build a new rental with four or more units, which is a different program worth understanding if you’re planning at that scale.
The bigger point is this: you need to know exactly where your project lands before you commit to a timeline or a scope of work. Whether you’re planning a multiplex conversion or an ADU, the difference between getting this right and getting it wrong can be tens of thousands of dollars, in either direction.
This isn’t a reason to avoid a build or a renovation. It’s a reason to run the numbers properly before you start one.
Get Your Numbers Right Before You Build
Getting this rebate right comes down to knowing your numbers before you commit to a project, not after. The right strategy depends on your specific property, its appraised value, and your timeline, and that’s exactly where having an experienced team pays off.
Our brokerage specializes in Toronto multiplexes. We’ll help you find deals, crunch the numbers, and guide you through renovations and management. If you want full support in Toronto multiplex investing, our team can help you:- Find high-potential properties
- Crunch the numbers so you know exactly where you stand
- Coach you through renovations to maximize returns
- Lock in great tenants
- Provide full property management so your investment runs smoothly
What Toronto Real Estate Investment Is Right For You?
Check out our complete Toronto real estate investment guide for all the details and real-life examples. If you’re ready to dive in, just book a call with us!
This is for educational purposes only; it does not guarantee future performance or serve as financial or tax advice.
