The 2025 Federal Budget, unveiled on November 4, 2025, brings one of the most ambitious housing and affordability agendas in recent years. While these measures remain proposals and are not yet law, they outline the federal government’s direction for restoring affordability, boosting construction, and supporting Canadians struggling to enter or stay in the housing market. For buyers, sellers, and investors alike, this budget sets the tone for how policy and taxation could shape the real estate landscape over the next few years.

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A central highlight is the proposed elimination of the Goods and Services Tax (GST) on newly built homes priced up to one million dollars for first-time buyers, with a partial reduction for homes up to $1.5 million. This measure, introduced through Bill C-4, acknowledges how rising interest rates and construction costs have pushed ownership further out of reach. For many families, the removal of GST could mean savings of up to $50,000, providing meaningful relief at a time when every dollar matters. The Home Buyers’ Plan is also being expanded, allowing first-time buyers to withdraw up to $60,000 from their RRSPs, up from $35,000 and extending the repayment grace period, giving purchasers more flexibility to use their savings toward a down payment.

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The government has also proposed repealing the Underused Housing Tax effective the 2025 calendar year. The 1% annual tax, intended to deter foreign speculation, created compliance challenges for non-resident owners and their advisors. Its removal is expected to simplify reporting and may help restore confidence among international investors, particularly in markets like Toronto and Vancouver. On a national scale, the creation of Build Canada Homes marks a major policy shift. Backed by $13 billion, this new federal agency aims to double the pace of homebuilding across the country by developing federal lands, encouraging modular construction, and partnering with private developers, municipalities, and Indigenous communities. Complementary funding includes $1.5 billion for the Canada Rental Protection Fund and $1 billion for Transitional and Supportive Housing.

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To expand financing, the Canada Mortgage Bond cap will increase from $60 billion to $80 billion beginning in 2026, allowing lenders and builders to access more affordable funding for rental developments. Meanwhile, the government has confirmed that the Apartment Construction Loan Program and CMHC-insured lending will continue to support large-scale multi-unit projects. Investors will also be affected by new tax measures, including an increase in the capital gains inclusion rate from 50% to two-thirds for individuals realizing more than $250,000 in annual gains, though the principal residence exemption remains unchanged. The CRA will strengthen enforcement of anti-flipping rules and ensure that assignment sales of new homes and condos are properly taxed for HST/GST.

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Other initiatives include a new Green Building Retrofit Tax Credit to encourage energy-efficient upgrades, and $2.8 billion in funding for Indigenous Housing in urban, rural, and northern areas. Combined with a one-percentage-point income-tax cut for lower- and middle-income Canadians and the rollback of the carbon tax, these measures aim to ease both housing and living costs.

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Overall, the 2025 Federal Budget represents more than a fiscal roadmap, an attempt to rebuild affordability and confidence in Canada’s housing system. The mix of financial relief for buyers, tax adjustments for investors, and large-scale federal investment in housing supply could reshape Ontario’s real estate market in the years ahead. At Kormans LLP, our real estate lawyers continue to monitor these developments to guide clients through this evolving landscape, whether they are purchasing their first home, developing a project, or managing existing investments.

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Disclaimer: This article provides general information on proposed measures in Canada’s 2025 Federal Budget and does not constitute legal advice. For guidance specific to your circumstances, please contact a lawyer at Kormans LLP.

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