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Good news for first-time home buyers! On May 27, 2025, legislative proposals were introduced in the Parliament to amend the Excise Tax Act by creating a new GST rebate specifically for first-time home buyers. If passed, this rebate would eliminate GST for eligible buyers on new homes priced up to $1 million and reduce the amount of GST payable on new homes priced between $1 million and $1.5 million. It’s important to note, however, that the bill is still in the legislative process and has not yet been enacted into law. As such, the rebate is not currently in effect. 

In Ontario, the purchase of newly built homes is subject to Harmonized Sales Tax (HST) at a rate of 13%, which includes both the federal Goods and Services Tax (GST) of 5% and the Provincial Sales Tax (PST) of 8%. The proposed First-Time Home Buyer GST Rebate would apply only to the federal portion of the tax, meaning the 5% GST could be eliminated or reduced for qualifying buyers. However, the 8% PST portion of the HST would still remain payable. 

If you are a first-time home buyer, you may be eligible for the 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. 

To be considered a “first-time home buyer” for the purposes of the 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. 

For new homes purchased from a Builder, at least one of the purchasers must be a first-time home buyer who is acquiring the home for use as their primary place of residence. That individual must also be the first person to occupy the home. 

The GST rebate would generally apply if: 

• the agreement of purchase and sale is entered into 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. 

It will be interesting to see how Builders handle this GST relief in their Agreements of Purchase and Sale. Currently, most Builders include a clause requiring purchasers to assign their rebates (such as GST/HST New Housing Rebate) to the Builder on closing. This means that buyers effectively pay the same amount of purchase price, while the Builder claims the rebate from the CRA. If Builders treat the new rebate the same way, buyers will likely be required to assign their rebate to the Builder on closing. 

If you have any questions about the First-Time Home Buyers GST Rebate or need assistance with your real estate transaction, our team would be happy to help. Feel free to contact our office at (905) 270-6660 or email us at info@kormans.ca. 

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Yashkaran Singh is an Associate Lawyer at Kormans LLP. You can reach Yashkaran here: ysingh@kormans.ca.

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