HST in Ontario is 13 percent — 5 percent federal GST and 8 percent provincial portion — and it applies to both labour and materials on virtually every renovation. On a $200,000 renovation, that is $26,000 in HST. The number is large enough that it should be in the conversation from the first quote.
There are exceptions, rebates, and gotchas. Most of them are narrower than they sound.
The default rule
A registered contractor in Ontario charges HST at 13 percent on the entire invoice — labour, materials, subcontractor passthroughs, project management. The contractor remits the HST to the CRA and claims input tax credits on materials and subcontractor invoices, so the net HST collected is roughly 13 percent of the value the contractor adds, but the homeowner pays 13 percent on the gross.
A contractor whose total annual revenue is below $30,000 is a "small supplier" and is not required to register for or charge HST. Few legitimate renovation contractors are below this threshold. If your contractor is not charging HST, ask why. The answers are: they are very small, they are unregistered (which is illegal), or they are running cash off-book (also illegal).
A "we can do it cheaper for cash" offer is illegal tax evasion. Beyond the ethical and legal issues, it leaves you with no enforceable contract, no warranty, no recourse if something goes wrong, and no documentation for the work in your home's history. We have written about this in our hiring piece and it bears repeating: do not pay cash for renovation work to avoid HST.
The Substantial Renovation Rebate, the rare case
The federal GST/HST New Housing Rebate has a category called the Substantial Renovation Rebate. If you "substantially renovate" your principal residence, you can claim back a portion of the HST you paid — currently up to $24,000 in Ontario for the provincial portion plus a federal rebate that scales down by home value.
"Substantially renovate" has a specific CRA definition. The renovation must remove or replace at least 90 percent of the interior of the existing home, with only the foundation, exterior walls, interior load-bearing walls, floors, roof, and stairs allowed to remain. In practice, this means a full gut renovation that takes the building back to studs and replaces almost everything inside.
A kitchen renovation does not qualify. A bathroom renovation does not qualify. A basement finish does not qualify. A whole-home gut renovation that takes the entire interior down to studs and rebuilds it might qualify. We have done a handful of these in 18 years of work. The rebate is real but the eligibility criteria are strict, and the CRA reviews claims carefully.
If you think your project might qualify, talk to an accountant before the renovation starts. The documentation requirements are significant — you need photographic evidence of the before-state, complete invoices, proof of principal-residence status, and a clear narrative of what was removed and replaced. After the fact, this is hard to assemble.
The owner-occupied resale exemption, with gotchas
When you sell a residential resale property in Ontario, the sale itself is HST-exempt. This is the rule that makes housing transactions clean for most homeowners. It is the reason you do not pay 13 percent HST when you buy a resale house from another homeowner.
There are two gotchas worth knowing.
First, the exemption applies to "used residential complexes," which means homes that have been previously occupied by an owner. A new build sold by a builder is not exempt — HST applies, often partially rebated through the New Housing Rebate. If you buy a brand-new condo or a builder-built detached, HST is in the price.
Second, the exemption can be jeopardized if you do work on the home that the CRA characterizes as a substantial renovation and you then sell it. Substantial renovations can re-trigger HST on the eventual sale, the way new construction does. This is rare in practice — most renovations are well below the substantial threshold — but it is a real consideration on full gut renovations of a property you intend to sell.
If you are a flipper or a developer who buys, renovates, and sells frequently, you may be in a different category entirely (running a business rather than improving a personal residence), and the HST treatment shifts. Talk to an accountant.
How HST flows through the quote
When we quote a project, the price is shown two ways: subtotal and HST. The subtotal is the contract value; the HST is 13 percent on top. A $250,000 renovation contract is $250,000 + $32,500 HST = $282,500 total payable.
Material allowances inside the quote (tile allowance of $X, fixture allowance of $Y) are pre-HST and the HST applies to whatever you actually spend within the allowance, plus our markup on coordinating it.
Subcontractors that we engage on your behalf are typically billed to us at their HST-inclusive rate, and we pass through the cost as part of our invoice with HST on the entire line. The CRA gets paid HST once on the work; you do not pay HST twice.
For more on how we sequence and price projects, see our process page. For service overviews, see kitchens, bathrooms, basements, and home additions.
The HST in your project budget
If you are budgeting for a renovation, do the addition explicitly:
- Construction contract: $X
- HST at 13 percent: $X * 0.13
- Total cash you need: $X * 1.13
Plus contingency. Plus permits. Plus design fees if separate. Plus furniture and decor at the end. A $200,000 renovation is a $260,000 to $290,000 cash commitment by the time everything is in.
We see homeowners surprised by HST late in the process more often than any other line item. The number is large, it is on the federal government, and there is no negotiating it. Build it into the budget from day one.
When HST does not apply
A few narrow categories where HST does not apply or applies differently:
- Work performed entirely outside Canada is not subject to HST. This is irrelevant for a Toronto renovation but comes up for design or specification work performed by a non-Canadian firm.
- Long-term residential rentals (one month or more) are exempt from HST on the rent, but the underlying renovation work to create or modify a rental property is fully HST-applicable.
- Charitable and non-profit work has different HST treatment that does not apply to private residential renovation.
- Some mobility modifications for disability accommodation qualify for partial relief through medical expense tax credits — talk to an accountant about specifics.
For most homeowners, the rule is simple: HST is 13 percent on the entire renovation cost. Plan for it in cash, not as an afterthought.
What to do next
Add 13 percent to whatever budget number you are currently working with. If the post-HST number is uncomfortable, scale the project down rather than scaling expectations down — you cannot quietly reduce the HST. Use our cost calculator for an estimate that includes HST in the total. If your project is a full gut renovation that might qualify for the Substantial Renovation Rebate, talk to an accountant before demolition starts.
