GST Rebate for First-Time Homebuyers
In a significant move to address housing affordability, the Canadian government just announced a new Goods and Services Tax (GST) rebate for first-time homebuyers purchasing new homes valued up to $1.5 million. This initiative aims to reduce the financial burden on prospective homeowners and stimulate the construction of new housing across the country.
Understanding the New GST Rebate
Effective for agreements signed on or after May 27, 2025, the First-Time Home Buyers’ GST Rebate (FTHB GST Rebate) offers:
Under $1 million: A full 5% GST rebate
$1 million to $1.5 million: A phased-out rebate, decreasing linearly to zero at $1.5 million (e.g. a home valued at $1.25 million would qualify for a 50% GST rebate of $25,000)
Over $1.5 million: No rebate
Note: This applies to the federal GST portion only and the provincial sales tax components remain unaffected.
Eligibility Criteria
To qualify for the FTHB GST Rebate, applicants must:
Be at least 18 years old.
Be a Canadian citizen or permanent resident.
Not have owned and lived in a home in the current or previous four calendar years.
The home must be intended as the primary place of residence, and the buyer must be the first occupant. This rebate will not apply to investors or corporate buyers.
Agreements must be entered into between May 27, 2025, and before 2031, with construction starting before 2031 and substantial completion before 2036. This rebate will not apply to purchases entered into before May 27, 2025.
Impact to Investors
Unfortunately investors do not qualify for this new GST New Home Buyer rebate but you still qualify for the existing GST Rental Rebate on purchases up to $450,000. Read here for more information.
Impact to Affordability Across Canada
This is huge for first time buyers because it will effectively reduce your cost by 5% for most new homes. There is already a rebate available of up to 36% of the GST paid on a purchase of up to $350,000 and a sliding scale up to $450,000, but this extends that to a full refund of the GST up to a $1 million purchase.
In cities like Calgary, Edmonton, and Ottawa this is HUGE but for Toronto and Vancouver, this will barely move the needle because most first-time home buyers in those markets are buying an existing property which does not include GST and are not affected by this announcement.
This is a welcome change but I believe this does very little to address the system issues of home affordability across Canada (time for approvals, bureaucracy/red tape, zoning, development charges, construction material costs, corporate landlords, etc.). Thank you Mark Carney but more is still required. Now it’s up to the province to eliminate the HST/PST to really start moving the needle.
Prospective homeowners should consult with financial advisors or real estate professionals to understand how this rebate may apply to their specific circumstances.
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