GST Relief for First-Time Home Buyers
On May 27, 2025, the Canadian government announced a significant initiative to assist first-time home buyers by providing GST relief on new homes valued up to $1.5 million. This measure aims to alleviate the financial burden on young Canadians entering the housing market and to stimulate the construction of new homes across the country.
First-time home buyers may qualify for a GST rebate when purchasing a newly built home or building one on their own land.
Key Details:
Full GST Rebate for Homes Up to $1 Million: First-time buyers purchasing new homes priced at $1 million or less will receive a 100% rebate on the GST, potentially saving up to $50,000.
Partial GST Rebate for Homes Between $1 Million and $1.5 Million: For new homes valued between $1 million and $1.5 million, the GST rebate will be phased out linearly. For instance, a home priced at $1.25 million would be eligible for a 50% rebate.
No GST Rebate for Homes Above $1.5 Million: New homes priced at $1.5 million or more will not qualify for the GST rebate.
Eligibility Criteria:
First-Time Home Buyer Definition: An individual who is at least 18 years old, a Canadian citizen or permanent resident, and has not owned or lived in a home they or their spouse/common-law partner owned in the current or previous four calendar years.
Property Requirements: The rebate applies to new homes purchased from a builder, homes built by the buyer or someone they hire, or shares in a co-operative housing corporation.
Primary Residence: The home must be intended as the primary place of residence for the buyer.
Implementation Timeline:
Effective Date: Applies to agreements of purchase and sale entered into on or after May 27, 2025.
Construction and Occupancy Deadlines: Construction must begin before 2031, and the home must be substantially completed before 2036.
Financial Impact:
This initiative is projected to provide approximately $3.9 billion in tax savings to Canadians over five years, starting in the 2025-26 fiscal year.
Key Takeaways:
Significant Savings: First-time buyers can save up to $50,000 on new homes priced at $1 million or less.
Broader Eligibility: The rebate also applies to homes built by the buyer or purchased through co-operative housing corporations.
Stimulating Construction: By incentivizing the purchase of new homes, the measure aims to boost housing supply across Canada.
Thinking about buying a new home? Let’s connect — I can help you explore eligible listings and make the most of the GST rebate as a first-time buyer.
