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.
Sounds like a game changer, right? Well... not quite.
Let’s unpack what this actually means, who qualifies, and—more importantly—why this policy might look good on paper but does very little to address Canada’s deeper affordability crisis.
What’s the Government Actually Doing?
First-time homebuyers can now benefit from an enhanced full GST rebate (5%) on the purchase of newly constructed homes. Here’s how it breaks down based on the purchase price:
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
Let’s say you’re a first-time buyer purchasing a $850,000 new build. Without the GST rebate:
You’d pay $42,500 in GST.
With the full rebate:
You save the entire $42,500 in GST.
That’s meaningful. But again—it only applies if you’re buying new construction and you qualify. Looking at something above $1.5M? You’re out of luck.
Note: This applies to the federal GST portion only and the provincial sales tax component remains unaffected.
Who is Eligible?
To qualify for the FTHB GST Rebate, buyers must:
Be at least 18 years old.
Be a Canadian citizen or permanent resident.
Not have owned 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.
What are the Limitations?
An individual would not be permitted to claim a FTHB GST Rebate more than once in their lifetime.
An individual would not be permitted to claim a FTHB GST Rebate if their spouse or common-law partner previously claimed a FTHB GST Rebate.
If, pursuant to an assignment sale, a FTHB assumes the rights and obligations of another person that is a purchaser of a new home under an agreement of purchase and sale with a builder, the FTHB rebate would not be available if that original agreement of purchase and sale was entered into before May 27, 2025.
If an agreement of purchase and sale for a new home was originally entered into before May 27, 2025 and the agreement is subsequently cancelled and a new agreement of purchase and sale is entered into (or the agreement is varied or altered to effect that outcome), the FTHB GST Rebate may be disallowed in respect of the sale of a new home under the new agreement (and would not be allowed in respect of the varied or altered agreement).
Construction of the home begins before 2031 and the home is substantially completed before 2036.
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.
Who Actually Benefits From This?
Here’s the catch: most first-time buyers aren’t purchasing $900K–$1M new construction homes. They’re already priced out. So while this sounds like a major affordability initiative, it really:
Helps a small percentage of middle- to high-income buyers
Leaves out investors and assignment buyers
Doesn’t address resale inventory, interest rates, or cost of borrowing
This is not a silver bullet. It’s a tax break for a narrow group.
Impact to Housing Affordability
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.
Let’s talk real about what’s still driving housing unaffordabiility:
Development charges are out of control in cities like Toronto and Vancouver
Material and Labour costs are at all-time highs
Zoning restrictions and red tape slow down much-needed supplyBuilders are pausing projects because the numbers don’t work - if developers can’t profit, they won’t build.
A 5% tax rebate doesn't fix any of that. It’s a start—but without serious reforms to cost structures and supply chain issues, we’re just applying a Band-Aid to a broken system.
Key Takeaways
Yes, this rebate helps some buyers save money—especially in markets like Calgary where new builds are still priced below $1M.
No, it does not solve Canada’s affordability crisis.
It doesn’t help renters, resale buyers, or those trying to build wealth through investment.
It’s a politically motivated headline—but not a structural solution.
🧠 What Should You Do Next?
If you’re a first-time buyer or investor trying to navigate this messy policy landscape, you need clarity—not just headlines.
That’s why I created tools like:
The GST/HST Rebate Calculator – so you know exactly what you’re eligible for
The Cash Flow Calculator – to model your real holding costs
And if you're still not sure how to take advantage of these shifts…
📞 Book a 1-on-1 consultation with me and I’ll walk you through how to make your first purchase (or next investment) smarter—not riskier.
Let’s cut through the noise and build wealth the right way.
NOTE: Prospective homeowners should consult with financial advisors or real estate professionals to understand how this rebate may apply to their specific circumstances.
Real Talk. Honest Advice.
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