In a significant move to make homeownership more affordable for young Canadians and stimulate housing construction, the federal government has announced a new GST rebate for first-time home buyers on new homes valued up to $1.5 million. Introduced on May 27, 2025, this new tax rebate is part of a broader effort to ease financial pressures for new buyers and boost the housing supply nationwide.
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What is the New GST Rebate New Homes?
The First-Time Home Buyers’ GST Rebate (FTHB GST Rebate) allows eligible Canadians to recover up to $50,000 in GST or the federal portion of HST on the purchase or construction of a new home. This new measure is designed to complement the existing GST/HST New Housing Rebate and focuses specifically on first-time buyers.
Under this program:
- 100% of the GST will be rebated for homes valued at $1 million or less.
- A partial rebate will be available for homes valued between $1 million and $1.5 million, phasing out linearly.
- No rebate will be provided for homes priced above $1.5 million.
Is there Any Extra GST/HST Payment Coming in 2025: What Canadians Need to Know
Who is Eligible GST Rebate New Homes?
To qualify as a first-time home buyer, you must:
- Be at least 18 years old,
- Be a Canadian citizen or permanent resident, and
- Not have owned or lived in a home you or your spouse/common-law partner owned in the current year or the past four calendar years.
The rebate applies to:
- Newly built homes purchased from a builder,
- Owner-built homes (including homes constructed on leased or owned land), and
- Shares in cooperative housing corporations, provided the unit is the buyer’s primary residence.
Key Dates GST Rebate New Homes
The rebate is available for agreements entered into:
- On or after May 27, 2025, and
- Before 2031, with construction substantially completed before 2036.
This timeline ensures that the rebate supports both current and upcoming housing projects, giving first-time buyers flexibility and time to plan their purchases.
Real Savings: Up to $50,000 Back
With this new GST relief, a first-time home buyer purchasing a home valued at exactly $1 million can save the full 5% GST, or $50,000. For homes valued at $1.25 million, the rebate would be reduced to $25,000. Homes valued above $1.5 million are not eligible for any rebate.
The federal government estimates this measure will provide $3.9 billion in tax relief over five years, beginning in the 2025-26 fiscal year.
Special Conditions and Limitations
- You can only claim the FTHB GST Rebate once in your lifetime.
- If your spouse or partner has claimed the rebate before, you are not eligible.
- The rebate is not available for homes purchased under agreements signed before May 27, 2025, even if the home has not yet been built.
- In the case of assignment sales, if the original agreement predates May 27, 2025, the rebate is not applicable.
What This Means for First-Time Buyers in 2025
With home prices in many Canadian cities often exceeding $1 million, this new rebate targets a key financial pressure point for younger buyers entering the housing market. By reducing the upfront cost of new homes and encouraging construction, the federal government aims to make homeownership more achievable without overheating the market.
This GST relief for first-time home buyers on new homes valued up to $1.5 million is a welcome measure for many Canadians and could significantly impact affordability in major urban centres, where average prices often push past the $1 million threshold.