Proposed GST Relief For First-Time Home Buyers: What It Could Mean For You

Woitzik Polsinelli LLP (“WP Law”) has specialized in real estate for over 22 years and was founded by lawyer Mark Woitzik in 2001. Despite facing a life-altering accident during his first year of university, Mark persevered and obtained an economics degree with Honors from York University after a year of physical rehabilitation. He later attended Osgoode Hall Law School, where he was called to the Bar in 2000. Over the course of his career, he developed his firm to be one of the top Real Estate firms in the Durham Region and eventually within the entire Greater Toronto Area. Though Mark no longer practices Real Estate Law, he has become well-known as a commentator on accessibility issues, providing expert insights on interest rates and real estate matters through appearances on CTV News.

Explore Firm Details

Thinking of buying your first home? The federal Government of Canada ("Government") has proposed a new GST rebate (the "proposed rebate") aimed at helping first-time home buyers and boosting housing supply.

Canada Tax

Introduction

Thinking of buying your first home? The federal Government of Canada ("Government") has proposed a new GST rebate (the "proposed rebate") aimed at helping first-time home buyers and boosting housing supply. If passed, this measure could significantly reduce the cost of purchasing newly built homes, potentially saving eligible buyers up to $50,000 in sales taxes. ¹

We have prepared a breakdown of what is being proposed, how it would work, and who could benefit.

Overview of the Proposed GST Relief Measures

As part of the 2025 federal budget, the Government is proposing to eliminate the GST on new homes valued up to $1 million and offer a partial rebate on new homes valued between $1 million and $1.5 million. ²

Homes priced at $1 million or less would qualify for a full GST rebate. ³ Whereas, homes between $1 million and $1.5 million would qualify for a phased-out rebate. ⁴ For example, a $1.25 million home could see a 50% rebate, roughly $25,000 in savings. Homes priced above $1.5 million would not be eligible for the rebate. ⁵

If passed, the rebate is to take effect for Agreements of Purchase and Sale ("APS") entered into on or after May 27, 2025. ⁶

Who Would Be Eligible?

To qualify for the proposed rebate, a buyer must be ⁷:

A first-time home buyer
Purchasing a newly built home, building a home, or buying a share in a cooperative housing corporation

A first-time home buyer would need to be ⁸:

At least 18 years old
A Canadian citizen or a permanent resident of Canada
Not have lived in a home that you (or your spouse/common-law partner) owned during the calendar year or in the four prior calendar years

Types of Eligible Purchases

1. New Homes Purchased from a Builder

You may be eligible if ⁹:

At least one purchaser is a first-time home buyer
The home is purchased for use as a primary residence
The buyer is the first occupant of the home
The APS is entered into on or after May 27, 2025, and before 2031
Construction begins before 2031 and is substantially completed before 2036

If all criteria are met, the buyer could recover up to $50,000 of the GST or federal portion of the HST. ¹⁰

2. Owner-Built Homes

For a home you build (or hire someone to build), the proposed rebate would allow you to recover up to $50,000 of the GST or federal portion of the HST paid on construction costs. ¹¹

To qualify ¹²:

At least one owner-builder must be a first-time home buyer;
The home must be used as a primary residence; and
Construction begins on or after May 27, 2025 and before 2031, with substantial completion by 2036.

3. Shares of a Cooperative Housing Corporation

You may also qualify if you buy a share in a cooperative housing corporation where GST/HST was paid on new housing. The rebate would not apply if the cooperative housing corporation already qualified for a 100% GST rebate for purpose-built rental housing. ¹³

Eligibility conditions are similar to the above-mentioned ¹⁴:

The co-op unit must be your primary residence;
You are a first-time home buyer.

Limitations

To ensure the rebate is used as intended for first-time home buyers, the Government has proposed several limitations ¹⁵:

The proposed rebate can only be claimed once
If your spouse or common-law partner has already claimed the rebate, you are not eligible
The proposed rebate would not apply on APS signed before May 27, 2025, even if you are a first-time home buyer
If an APS is cancelled and re-signed after May 27, 2025 to meet the cutoff, the rebate would be disallowed
Investors and non-occupants would not qualify
The proposed rebate does not apply to rental properties

Need Help Navigating Your First New Home Purchase?

The proposed GST rebate could offer meaningful financial relief to first-time home buyers. While the measure is not yet law, understanding its potential impact and preparing accordingly can be beneficial. If you are considering buying your first home from a builder or building your own home, it is important to speak with an experienced real estate lawyer early in the process to help you assess your eligibility, review your Agreement of Purchase and Sale, and ensure you are positioned to take full advantage of any new incentives.

Footnotes

1 The Government of Canada, "GST Relief for First-Time Home Buyers On New Homes Valued Up to $1.5 Million" (27 May 2025), online: < https://www.canada.ca/en/department-finance/news/2025/05/gst-relief-for-first-time-home-buyers-on-new-homes-valued-up-to-15-million.html >.

2 Ibid.

3 Ibid.

4 Ibid.

5 Ibid.

6 Ibid.

7 Ibid.

8 Ibid.

9 The Government of Canada, supra note 1.

10 Ibid.

11 Ibid.

12 Ibid.

13 Ibid.

14 Ibid.

15 The Government of Canada, supra note 1.

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.