First-time home buyers purchasing newly built or substantially renovated homes in Ontario may be eligible for significant HST relief under recently proposed federal and provincial measures. While these rebates are subject to legislative approval, the potential HST savings are substantial and warrant careful planning before entering into a purchase agreement.
This article outlines the proposed HST rebates, eligibility requirements, timing considerations, and planning risks that first-time buyers should understand before relying on these incentives.
Key Takeaways
- Up to $130,000 in HST relief may be available, but only if proposed federal and Ontario legislation is enacted and eligibility criteria are met.
- Timing of ownership transfer matters, particularly for homes acquired before Royal Assent, where rebates must be claimed directly from the CRA.
Overview of Proposed HST Rebates for First-Time Buyers
Two separate rebate programs are relevant for first-time buyers of new homes in Ontario:
- A proposed federal First-Time Home Buyers GST/HST Rebate, affecting the federal portion of HST.
- A proposed Ontario first-time home buyer rebate, affecting the provincial portion of HST.
If both measures are enacted as proposed, eligible buyers could eliminate both the federal and provincial portions of HST on qualifying homes priced up to $1 million, with partial relief available on higher-value homes.
Federal First-Time Home Buyers GST/HST Rebate (Proposed)
The federal government has proposed a First-Time Home Buyers GST/HST rebate that would reduce or eliminate the federal portion of HST on qualifying new or substantially renovated homes. If enacted, eligible first-time home buyers could recover up to 100 percent of the federal HST, to a maximum of $50,000, on homes valued up to $1 million. For homes priced between $1 million and $1.5 million, the rebate would be gradually reduced, with no federal rebate available on homes valued at $1.5 million or more. This rebate would apply in addition to the existing GST/HST New Housing Rebate, functioning as a top-up where applicable.
Ontario First-Time Home Buyer HST Rebate (Proposed)
Ontario has proposed an additional rebate that would remove the full 8 percent provincial portion of HST for first-time buyers purchasing qualifying new homes. This rebate would apply alongside Ontario’s existing HST New Housing Rebate, which currently provides up to $24,000 of relief. When combined, eligible first-time buyers could effectively eliminate the provincial HST on homes valued up to $1 million. For homes priced between $1 million and $1.5 million, the rebate would be phased out in line with the proposed federal structure, with total provincial relief not falling below the current $24,000 minimum.
Who Qualifies as a First-Time Home Buyer
Under the proposed federal rules, a first-time home buyer must be at least 18 years old, be a Canadian citizen or permanent resident, and must not have lived in a home they or their spouse or common-law partner owned in the year of purchase or any of the previous four calendar years. In addition, neither the individual nor their spouse or partner can have previously claimed a First-Time Home Buyers GST/HST rebate. Eligibility is assessed using specific timing rules that vary depending on whether the home is purchased from a builder, built personally, or acquired with leased land.
Eligible Properties
The proposed rebates apply only to homes that are newly built or substantially renovated and acquired for use as the buyer’s primary place of residence. Rental properties, investment properties, and secondary residences are explicitly excluded, regardless of the buyer’s first-time status.
Effective Dates and Legislative Status
The proposed federal First-Time Home Buyers GST/HST rebate is tied to agreements of purchase and sale entered into after March 19, 2025, subject to the legislation receiving Royal Assent. Ontario’s proposed rebate is similarly contingent on the passage of enabling legislation and is expected to align with the federal framework. Until both measures are enacted and detailed administrative guidance is released, eligibility and timing should be treated as provisional, particularly for buyers entering into agreements near the effective date thresholds.
Where ownership of a qualifying home is transferred before the proposed legislation receives Royal Assent, the buyer must pay the full GST/HST at closing and apply directly to the CRA for the federal rebate once the legislation is enacted. In these situations, builders cannot credit the new federal rebate at closing, although existing federal and provincial new housing rebates may still apply.
Final Thoughts
The proposed federal and Ontario HST rebates represent a meaningful opportunity for eligible first-time buyers of new homes. However, these measures are neither automatic nor simple. Until legislation is enacted and transactions are reviewed in detail, projected savings should be treated as conditional, not guaranteed.
To receive insights like this directly, follow us on LinkedIn and subscribe to our blog for regular updates on legislation, compliance changes, and strategic accounting guidance that impact privately owned businesses across Canada.
