The federal government’s new GST rebate for first-time home buyers, effective May 27, 2025, provides enhanced affordability for buyers and brings new considerations and opportunities for those in the construction industry.

The new GST rebate applies for new builds where purchase agreements have been signed after May 26, 2025 and before January 1, 2031 and construction or substantial renovation completes before January 1, 2036.

What’s New?

The new First-Time Home Buyers’ GST Rebate provides a full rebate of the 5% GST (or the federal portion of the HST) on qualifying new homes valued up to $1 million. For homes priced between $1 million and $1.5 million, the rebate is gradually reduced, with no rebate available for homes priced at $1.5 million or more. This can mean up to $50,000 in savings for eligible buyers—an incentive that is likely to drive demand for new builds.

Key Eligibility Criteria for Buyers

  • Buyers must be at least 18 years old and a Canadian citizen or permanent resident.
  • Neither the buyer nor their spouse/common-law partner can have owned and lived in a home in the current or previous four calendar years.
  • The home must be intended as the buyer’s primary residence and must be the first occupancy after construction or substantial renovation.

What Types of Homes Qualify?

  •  New homes purchased from a builder, including single-family homes, townhouses, and condos.
  • Owner-built homes.
  • Shares in a cooperative housing corporation.

How Does the Rebate Work for Builders?

  • Buyers can assign the rebate to the builder at closing, allowing you to credit the rebate amount directly on the statement of adjustments and submit the application to the CRA on their behalf.
  • Only one rebate is available per individual or couple, even if they purchase multiple homes.
  • Builders should ensure their sales and closing processes are updated to accommodate the new rebate rules and to clearly communicate eligibility and documentation requirements to buyers.

Anti-Avoidance and Compliance Considerations

  • The rebate is strictly for first-time home buyers. If a buyer or their spouse/common-law partner has previously claimed the rebate, they are not eligible again.
  • Agreements signed before May 27, 2025, do not qualify, even if amended or assigned later.
  • The home must be used as a primary residence, not as an investment or rental property.

Provincial Rebates

Some provinces, such as Ontario, have announced plans to match the federal rebate with enhanced provincial rebates. Builders should monitor provincial announcements for additional opportunities to pass on savings to buyers.

What Does This Mean for Builders?

  • Marketing opportunity: Enhanced affordability for first-time buyers could boost demand for new homes in the sub-$1.5 million market.
  • Sales process updates: Builders should review and update their purchase agreements, closing procedures, and client communications to ensure compliance and to help buyers maximize their savings. Also update communications with your legal and Realtor professionals.

Have Questions?

Our team is ready to help you navigate the new GST rebate rules and position your business to take full advantage of these changes. Contact us for tailored advice and support.

 

Written by: Chris Brien, CPA

 

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