On May 27, 2025, the Government of Canada tabled a legislative proposal to introduce a new GST rebate for first-time home buyers (the "Rebate"), designed to reduce the financial burden of purchasing or building a new home in Canada. The proposal aims to stimulate the construction of new homes and make new homeownership more attainable for Canadian first-time homebuyers. The Rebate has been incorporated into Bill C-4, An Act respecting certain affordability measures for Canadians and another measure, which completed second reading on June 12, 2025.
The Rebate under Bill C-4 effectively eliminates the GST for first-time home buyers of new homes or substantially renovated homes valued up to $1 million and reduces the GST for first-time home buyers of new homes or substantially renovated homes valued between $1 million and $1.5 million. The Rebate will apply similar eligibility criteria as the existing GST/HST New Housing Rebate, which allows an individual to recover some of the GST (or federal part of the HST) paid for a new or substantially renovated house that is purchased for use as the individual's primary residence. Eligible purchasers will be able to save up to $50,000 as a result of the Rebate.
The primary differences between the new Rebate and the existing GST/HST New Housing Rebate are that the new Rebate is targeted towards first-time homebuyers and provides a rebate on GST paid for homes valued up to $1.5 million (as opposed to homes valued up to $472,500, depending on the type of home purchased).
Eligible Purchasers
To be considered a "first-time home buyer" eligible for the Rebate, a purchaser must be at least 18 years of age, either a Canadian citizen or a permanent resident of Canada, and have not lived in a home that was their primary residence, whether in or outside Canada, that they owned or that their spouse or common-law partner owned in the calendar year or in the four preceding calendar years.
In addition, the purchaser must be acquiring, constructing or substantially renovating the home for use as their primary residence and must be the first person to occupy the home after it is constructed or substantially renovated.
Where there is more than one purchaser, at least one of the purchasers must meet these requirements in order to qualify for the Rebate, and only one of the purchasers may apply for the Rebate.
An individual can only claim the Rebate once in their lifetime, and an individual cannot claim the Rebate if their spouse or common-law partner has previously claimed it.
For first-time buyers who purchase a new or substantially renovated home from a builder or a co‑op, the Rebate is only available if the agreement of purchase and sale is entered into on or after May 27, 2025. In line with this requirement, the proposed legislation contains anti-avoidance provisions which prohibit purchasers from obtaining a Rebate if they have an existing agreement of purchase and sale that was entered into before May 27, 2025 and they vary, alter, or assign such agreement, or terminate such agreement and enter into a new agreement, for the purposes of obtaining the Rebate.
Qualifying New Homes
There are three types of housing eligible for the Rebate: (1) new homes purchased from a builder; (2) homes built by the owner, or a builder hired by the owner, on owned or leased land; and (3) cooperative housing.
Regardless of the type of housing, in order to be eligible for the Rebate, construction or substantial renovation of the home must begin before 2031 and be substantially completed before 2036.
New Homes Purchased from a Builder
In addition to the requirements described above, in order for a new home to qualify for the Rebate, the purchaser must enter into the agreement of purchase and sale for the home after May 26, 2025, and before 2031, and ownership of the home must be transferred to the purchaser before 2036. Further, the total consideration paid for the home must be less than $1.5 million. However, if the purchase is for a home on lands subject to a long-term lease, in order to be eligible for the Rebate, the fair market value of the home must be less than $1.575 million.
Owner-Built Homes
For someone building or substantially renovating, or hiring a builder to build or substantially renovate a home, in order to qualify for the Rebate, construction or renovation must begin after May 26, 2025 (but before 2031) and the fair market value of the new home must be less than $1.5 million.
Cooperative Housing
Finally, first-time home buyers purchasing a share of a cooperative housing corporation (a "co-op") could be eligible for the Rebate if the agreement of purchase and sale for such share is entered into after May 26, 2025, but before 2031, and if the share in the co-op is transferred to the buyer before 2036. The total consideration paid for the share in the co-op must also be less than $1.575 million.
Rebate Amount
Under the Rebate, eligible first-time home buyers could recover up to $50,000 of the GST (or federal portion of the HST) paid on a newly constructed, or substantially renovated home.
The Rebate will have a linear phase-out, with the amount of Rebate varying depending on the type of housing and purchase price paid or the fair market value of the home. For example, eligible first-time home buyers of a new home where the purchase price paid is $1 million could receive a rebate of 100% of the GST paid on the purchase, whereas, for a new home purchased for $1.25 million, the purchaser could receive a reduced rebate of $25,000.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
