Buying a newly built home in Ontario in 2026 may come with significant new HST rebate opportunities, as a result of recent discussed legislative changes. However, real estate buyers should be careful not to assume that an HST rebate is already in effect, will automatically apply or that it will necessarily be credited on closing.

The federal First-Time Home Buyer GST/HST Rebate is now in effect and applies to qualifying first-time home buyers purchasing a new or substantially renovated home as their primary residence. The rebate can eliminate the 5% federal portion of HST on eligible new homes priced up to $1 million, with a reduced rebate available for homes between $1 million and $1.5 million. No rebate is available for homes priced at or above $1.5 million.

To qualify, the buyer must meet the first-time home buyer criteria, including age, residency, ownership history, and intended primary residence requirements. The Agreement of Purchase and Sale must generally be entered into on or after March 20, 2025, and before 2031, with construction and substantial completion timelines also being relevant.

Ontario has also proposed expanded HST relief for new homes. This proposal is broader than the federal first-time buyer rebate and is intended to assist eligible buyers of qualifying new homes, including current homeowners and certain investors. In some cases, the combined relief may be substantial, but the Ontario expanded rebate remains subject to final legislation, regulations, and administrative guidance.

For the proposed Ontario expanded relief, the Agreement of Purchase and Sale must generally be signed between April 1, 2026, and March 31, 2027. Construction must generally begin by December 31, 2028, and the home must be substantially completed by December 31, 2031. These dates are important, particularly for pre-construction purchases where delays are common and often outside the buyer’s control.

Buyers should also pay close attention to how the property will be used. A buyer claiming the rebate as a homeowner must generally use the property as a primary residence for themselves or an immediate family member as legally defined. Investors should expect the rules to follow the existing rental rebate framework, which usually requires a minimum 1-year long-term lease arrangement. Short-term rentals, vacant units, or informal occupancy arrangements may result in eligibility issues.

The Agreement of Purchase and Sale should be reviewed carefully to confirm whether HST is included in the purchase price, whether the builder is crediting any rebate on closing, and what happens if the rebate is denied or delayed. Buyers should also consider whether the agreement protects them if rebate eligibility is lost because of builder delay or failure to meet construction timelines.

These HST rebates may represent meaningful savings to buyers of new construction residential properties, but the rules pertaining to these rebates are detailed and still evolving. Early legal advice is strongly recommended to ALL buyers before entering a builder agreement.  Please make sure that your purchase agreement has a buyer lawyer review condition and/or that the 10-day statutory cooling off period applies to your purchase before signing!

At Kormans LLP, we assist buyers with reviewing new construction agreements and identifying possible HST rebate issues before they may become costly problems. If you have questions about a new home purchase, please contact our team at +1 905 270 6660.

Disclaimer: This article is for general information only. Rebate programs may be subject to further legislation, regulations, CRA administration, and government guidance.

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