GST Relief on the Way for First-time Homebuyers

The federal government has tabled legislation to eliminate the GST for first-time homebuyers of newly constructed homes worth up to $1 million.

If passed, this would save them up to $50,000 in sales tax.

GST would also be lowered for first-time buyers of new homes between $1 million and $1.5 million.

Homes bought from May 27, 2025, through to 2031 can qualify for the rebate, as long as construction starts before 2031 and finishes by 2036.

Canadians who already own a newly constructed home are not eligible for the federal sales tax relief, though there are some exceptions. Neither are investors.

While the Canadian Home Builders’ Association (CHBA) applauds the move, it is recommending that the government extend the GST relief policy to all buyers of new homes, not solely first-time buyers. This would enable move-up buyers to purchase new homes and ensure a further boost of housing supply, freeing up entry-level homes for first-time buyers in the existing housing market.

In addition, in Canada’s most expensive housing markets like the Greater Toronto Area, where average home prices are over $1 million, the limits should be increased to $1.5 million for the full rebate and phased down as the price of the home approaches $2 million.

Moreover, CHBA says the relief should be based on the closing date, not date of purchase and sale. If not, there will be many frustrated Canadians who have signed purchase and sale agreements already and will not be eligible, but are a long way off from taking possession of their home which may not even be under construction yet.