Ottawa: In a move to lower the upfront cost of buying a new home for first-time home buyers and spur the construction of new homes across the country, the Federal government has announced to eliminate the Goods and Services Tax (GST) for first-time home buyers on new homes up to $1 million and reduce the GST for first-time home buyers on new homes between $1 million and $1.5 million.
Today (May 27, 2025), the Minister of Finance and National Revenue, François-Philippe Champagne, tabled legislative proposals to amend the Excise Tax Act to introduce a new GST rebate for first-time home buyers (the “FTHB GST Rebate”). The Federal government said as a result of this rebate, first-time home buyers will be able to save up to $50,000 on a new home. This measure is expected to deliver $3.9 billion in tax savings to Canadians over five years, starting in 2025-26.
In a statement, the government announced eligibility to avail the benefit. The government said, “If you are a first-time home buyer, you may be eligible for a FTHB GST Rebate if you buy a new home from a builder; you build, or hire someone else to build, a home on land you own or lease; or you buy shares of a co-operative housing corporation.”
The FTHB GST Rebate will apply to the same types of housing and apply similar eligibility criteria and conditions as the existing GST/HST New Housing Rebate, with certain modifications to ensure that the rebate is targeted at first-time home buyers.
“To be considered a “first-time home buyer” for the purposes of the FTHB GST Rebate, an individual would generally need to meet the following conditions: be at least 18 years of age; be either a Canadian citizen or a permanent resident of Canada; and not have lived in a home, 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.”
Together with the existing GST/HST New Housing Rebate (where that rebate is applicable), the FTHB GST Rebate would provide for a rebate of 100% of the GST on new homes valued up to $1 million.
The FTHB GST Rebate would be phased out in a linear manner for new homes valued between $1 million and $1.5 million. For example, under the linear phase-out, a home valued at $1.25 million would be eligible for a 50% GST rebate (a rebate of up to $25,000).
No FTHB GST Rebate would be available for new homes valued at or above $1.5 million.
Moreover,
The FTHB GST Rebate would generally be available if the agreement of purchase and sale for the home is entered into with the builder on or after May 27, 2025 and before 2031; and construction of the home begins before 2031 and the home is substantially completed before 2036.
Jatinder Jay Minhas says
This is great news for new home buyers and construction industry