If you’re a first-time home buyer in Canada, navigating rising prices and high interest rates can feel overwhelming. That said, there is some good news.
On May 27, 2025, the Government of Canada introduced proposed legislative amendments to the Excise Tax Act (Canada) to establish a new Goods and Services Tax (“GST”) rebate for first-time home buyers (the “FTHB GST Rebate”). This new rebate will offer real financial relief when purchasing a newly built home.
To be more specific, the proposed FTHB GST Rebate will provide a rebate of 100% GST on new homes that are valued up to $1 million and reduce GST on new homes between $1 million and $1.5 million. This means that first-time home buyers will be able to save up to $50,000 on a new home.
Eligibility for the FTHB GST Rebate
1. The Buyer
To be considered a “first-time home buyer” for the purposes of the FTHB GST rebate, the buyer must be:
- at least 18 years of age;
- 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.
2. Types of Homes
If you are a first-time home buyer, you may be eligible for a FTHB GST 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.
3. Timing
The FTHB GST Rebate would generally be available if:
- the agreement of purchase and sale for the home is entered into with the builder 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.
Limitations of the FTHB GST Rebate
To ensure that the new rebate is available as intended to first-time home buyers, there are various limitations to the availability of the FTHB GST Rebate. These limitations are as follows:
- an individual can only claim a FTHB GST Rebate once in their lifetime;
- if an individual’s spouse or common-law partner previously claimed a FTHB GST Rebate, then the individual would not be permitted to claim a FTHB GST Rebate;
- a first-time home buyer will only qualify for the FTHB GST Rebate if their agreement of purchase and sale was dated on or after May 27, 2025;
- if an agreement of purchase and sale for a new home was originally entered into before May 27, 2025 and the agreement is subsequently cancelled and re-entered into for the purpose of the FTHB GST Rebate, the FTHB GST Rebate is not available.
Things to Keep in Mind
While the new rebate will help buyers by reducing upfront closing costs, it has a specific impact om developers and builders.
The FTHB GST Rebate comes at a time where the Canadian construction industry is experiencing high financing and construction costs, delays in regulations, an aging workforce, and most of all, various uncertainties tied to the Canadian trade war with the United States.
In addition, the assumed increased demand for new homes, driven largely by this rebate, will put further pressure on supply chains and labour availability. Builders may find it difficult to meet timelines, manage costs, or find materials, which could ultimately affect pricing and inventory levels for buyers.
Need a Real Estate Lawyer’s Help to Purchase a House in Ontario?
Buying your first home is a major milestone and having legal support makes all the difference. At Mann Lawyers LLP, our real estate team helps Ontario buyers navigate every step of the process, from offer to closing. We’ll make sure you understand what rebates you qualify for and how to claim them.
Have questions about the GST rebate or your first home purchase? Contact us today, as we’re here to help.
This blog post was written by Carly Baldachin, Summer Student, and Daniella Sicoli-Zupo, a Partner in the real estate team. Daniella can be reached at 613-369-0378 or at daniella.sicoli-zupo@mannlawyers.com.
