As an incentive to cushion the cost of buying a new home, the federal government announced on June 5 that it is removing the 5% GST for first-time homebuyers (FTHB). The full rebate applies to the purchase of new homes up to $1 million. If the house is between $1 million and $1.5 million, the GST rebate will be reduced.
The move will save first-time homebuyers up to $50,000 on the purchase of a new home, totalling around $3.9 billion in tax savings for Canadians, according to the Minister of Finance and National Revenue. The Parliamentary Budget Officer has estimated the savings at around $2 billion, as the federal government is more optimistic about the legislation’s impact.
In addition, the First-Time Home Buyers’ GST Rebate could save first-time homebuyers up to $240/month in mortgage payments on a $1 million new home if the developer doesn’t charge GST up front; and, because of the reduced overall cost, the down payment would also be lower.
You are eligible for the FTHB GST Rebate if the following conditions are met:
- This is your first purchase of a home.
- This purchase is of a newly built home from a home builder that will serve as your primary residence.
- You build or hire someone to build a primary residence on land that you own or lease.
- You purchase shares of a co-op housing corporation.
- The purchase agreement is made with the builder between May 27, 2025, and before 2031.
- Construction of the home commences before 2031 and is mostly completed prior to 2036.
Eligibility for status as a first-time homebuyer:
- You must be 18 years of age or older.
- A Canadian citizen or permanent resident.
- Never have lived in a home that you, your spouse, or common-law partner owned, inside or outside of Canada, in the calendar year or the past four calendar years.
If these conditions are met, you will receive a 100% rebate of the GST New Housing Rebate for the purchase of your new home if it is $1 million or lower.
If a first-time homebuyer purchases a home for between $1 million and $1.5 million, the rebate will be calculated in a linear manner. If the house is $1.25 million, for example, the GST rebate would be 50%. Any purchase exceeding $1.5 million is not eligible for the rebate.
For more details on the rebate, please visit the government website.
What this means
The move is anticipated as one of the first by the federal government to decrease upfront costs, increase incentives, and enhance the ability of first-time homebuyers to purchase their first home. In addition, it is hoped that this move will also spur the construction of new builds to meet demand, thereby improving affordability, one of the challenges currently facing many Canadians.
How many homes would this rebate cover? In Toronto alone, about 92% of new builds are expected to qualify for the new offer.
Unsure if you qualify? Want to know more? I can help you navigate your changing circumstances and opportunities.
Are you ready to move to the next stage? Let’s chat. Send me an email (hillary@hillarylane.ca) or text/phone (416-882-4707).
