New federal policy offers full GST relief on new homes up to $1M and partial rebates up to $1.5M for eligible first-time buyers.
On May 27, 2025, the Government of Canada introduced a new Goods and Services Tax (GST) relief measure aimed at first-time home buyers purchasing newly built homes. Known as the First-Time Home Buyers’ GST Rebate (FTHB GST Rebate), this initiative is part of broader efforts to improve housing affordability and stimulate new home construction across the country.
This rebate applies specifically to eligible individuals purchasing or building a new primary residence and is designed to reduce the upfront tax burden associated with buying a newly constructed home. The policy builds on existing housing rebate programs and introduces updated thresholds that better reflect today’s real estate market conditions.
Overview of the FTHB GST Rebate
The FTHB GST Rebate provides targeted GST relief on new homes purchased by first-time buyers:
Homes valued up to $1 million: Eligible buyers may receive a 100% rebate of the GST paid, equivalent to a maximum of $50,000.
Homes valued between $1 million and $1.5 million: The rebate is gradually reduced on a sliding scale, phasing out completely at the $1.5 million mark.
Homes at or above $1.5 million: No rebate is available.
The measure is intended to ease the financial strain for Canadians entering the housing market for the first time and encourage the development of new residential units by supporting demand.
This new rebate works alongside the existing GST/HST New Housing Rebate, and both may be available to qualifying buyers, depending on their province and circumstances.
Eligibility Criteria: Who Qualifies as a First-Time Home Buyer?
To access the FTHB GST Rebate, an individual must meet the following key conditions:
Be at least 18 years old;
Be a Canadian citizen or permanent resident;
Not have owned a home (or lived in a home owned by a spouse or common-law partner) in the calendar year of the purchase or any of the four preceding calendar years.
In addition, the property must be:
Acquired or built for use as the buyer’s primary place of residence, and
The first occupancy of the home must be by the eligible first-time buyer.
Only one individual in a purchasing group must meet the first-time home buyer definition to qualify for the rebate, but that individual must be the one who will live in the home.
Buyers who previously claimed the rebate (or whose spouse or partner has) are not eligible to claim it again.
What Types of Properties Are Covered?
The FTHB GST Rebate applies to the same types of properties eligible under the existing New Housing Rebate, with adjustments made to focus on first-time buyers. Qualifying housing types include:
Newly constructed homes purchased from builders;
Owner-built homes, where the buyer constructs a new home on owned or leased land;
Co-op housing shares, provided the cooperative paid GST on the new unit.
The rebate is not available for:
Co-op housing that qualifies for the separate 100% GST rebate for purpose-built rental housing;
Assignment sales where the original agreement of purchase and sale was signed before May 27, 2025.
To qualify, construction must begin before 2031, and the home must be substantially completed before 2036. The purchase agreement must also be signed on or after May 27, 2025, and before 2031.
Rebate Structure Based on Purchase Price
The rebate amount is determined based on the value of the home:
$1 million or less: Eligible for the full rebate of the GST paid, potentially up to $50,000.
Between $1 million and $1.5 million: Rebate is phased out proportionally.
For example, a $1.25 million home may be eligible for a rebate equal to approximately 50% of the GST.
$1.5 million or more: No rebate is available.
This structure reflects the government’s intent to balance affordability assistance with fiscal prudence by targeting relief where it is most needed.
Policy Context and Legislative Details
This initiative was introduced through proposed amendments to the Excise Tax Act, tabled by the Minister of Finance and National Revenue on May 27, 2025. While the government had previously indicated a retroactive effective date of March 20, 2025 in its party platform, the current legislative proposal sets the eligibility window beginning from May 27, 2025.
The rebate is projected to deliver approximately $3.9 billion in tax savings over five years, beginning in the 2025–2026 fiscal year.
Comparison to Previous Policy
This new measure represents a significant update to prior housing rebate rules:
Previous policy capped eligibility at homes under $450,000, with a maximum GST rebate of around $6,300—a figure unchanged since the early 1990s.
The 2025 update raises the rebate threshold to $1 million, introduces a phased-out rebate for homes up to $1.5 million, and increases the maximum possible rebate amount to $50,000.
The revised policy is more reflective of current housing market prices in major urban centers and seeks to offer more practical support to prospective first-time home buyers.
Complementary Housing Measures
The FTHB GST Rebate forms part of a broader set of federal housing initiatives announced in recent years, including:
An increase to the insured mortgage cap from $1 million to $1.5 million (effective December 2024);
Changes allowing longer amortization periods for first-time buyers;
Enhancements to the Home Buyers’ Plan (HBP) and the Tax-Free First Home Savings Account (FHSA).
Together, these policies aim to address multiple barriers facing Canadians in accessing homeownership, from upfront costs to financing options.
In Summary
The First-Time Home Buyers’ GST Rebate is a newly introduced federal policy providing meaningful tax relief for eligible first-time purchasers of new homes in Canada. By updating eligibility thresholds and increasing the maximum rebate amount, the policy reflects the economic realities of today’s housing market while supporting the development of new housing supply.
As with any government program, individual circumstances may affect eligibility or the value of the rebate received. Those considering a new home purchase are encouraged to consult with qualified professionals to understand how this rebate may apply to their specific situation.
Curious how the FTHB GST Rebate could impact your buying journey or home sale strategy? We’re closely tracking how this policy unfolds in local markets. Reach out if you’d like tailored insight based on your goals.
Comments:
Post Your Comment: