As part of the federal government’s attempts to make living and owning a home in Canada for younger Canadians (and any qualifying “first-time” home buyers) more affordable, Canada has introduced a new rebate to refund/offset of up to $50,000 of the GST on the price of a new home.
What is the First-Time Home Buyers’ GST Rebate?
Qualifying buyers get:
- A full GST rebate of $50,000 on new homes priced up to $1 million before the GST is added.
- A partial rebate available for homes priced between $1 million and $1.5 million (e.g., $25,000 rebate on a $1.25 million home).
- No rebate for homes over $1.5 million.
- Available to first-time buyers (and certain non-first-time homebuyers are outlined below) who sign a purchase agreement on or after May 27, 2025, and before 2031, provided construction is completed by 2036.
Do I qualify for the First-Time Home Buyers’ GST Rebate?
You may qualify if you meet the following conditions:
- You are at least 18 years old.
- You are a Canadian citizen or permanent resident; and
- You have not owned or lived in a home (in or outside Canada) owned by you or your spouse/common-law partner in the current year or past four years.
In other words, if you (and/or your partner) have previously owned and lived in a home (the same or separate properties more than 5 years ago), you may still qualify for this new rebate on the purchase of a new home that is subject to GST. Notably, all the HST provinces in eastern Canada will piggyback this rebate, in the same way that most of them have for the new enhanced long term rental property GST/HST rebate. Quebec has not yet announced whether it will offer this rebate to Quebecers for nearly 10% QST.
Which properties are eligible for the First-Time Home Buyers’ GST Rebate?
The following properties qualify for the First-Time Home Buyers’ GST Rebate:
- New homes purchased from a builder, including homes on leased land that will be your primary residence.
- Owner-built homes, including those built by hiring a contractor on land owned by the individual(s) new homeowners.
- Shares in co-operative housing, if the unit will be your primary residence.
Are there any additional conditions for accessing the First-Time Home Buyers’ GST Rebate?
In addition to the above, there are a few extra things that you should be aware of regarding the First-Time Home Buyer’s GST rebate:
- The rebate only applies if the home will be your primary place of residence, and you’re the first occupant after construction is completed.
- You can only claim the rebate once in your lifetime.
- Your spouse or common-law partner must not have claimed the rebate before.
- Homes bought under agreements signed before May 27, 2025, will not qualify even if agreement is re-assigned or altered, and represents anti-avoidance rules to prevent “gaming” of the new rebate.
Our takeaways on the First-Time Home Buyers’ GST Rebate
At the time of writing, draft legislation has been released, but not yet passed and the details above are based on the Finance Canada’s news release of May 27, 2025. Although not mentioned in the news release, the HST provinces of Ontario and the Maritimes, will also be providing rebates; however it is not clear if Quebec will follow suit.
Notably, the draft legislation does not allow the rebates to be assigned to builders, therefore individual homeowners will apparently need to apply for the new rebate directly with the Canada Revenue Agency. This will relieve builders from having to “police” the new rebates and the purchasers’ qualifying criteria and the anti-avoidance rules to prevent abuse of the rebate for agreements entered shortly before the rules take effect.
Expect further details to be released soon from the CRA in the coming months regarding how to apply for the rebate, any new forms and more information outlining how the new GST/HST rebate will work in practice. CRA has noted that the legislation is expected to receive Royal Assent by early fall of 2025 and that there may be additional tweaks to the draft legislation that may include changes to the ability for applicants to assign the rebate to the builder, like the existing rebate.
A Word of Caution
If this change is made, builders would be at risk for ensuring that each new home buyer qualifies for the rebate, given that there would likely be some form of joint liability between the builder and the homebuyer. Mitigating this risk may be extremely difficult and onerous for builders to “police” all the qualifying criteria, such as attempting to confirm if the homebuyer(s) have not owned and lived in a home in Canada or anywhere else in the world in the prior 5 years, for example.
Until the legislation is passed, builders would be wise not to have the homebuyer(s) credit the rebate to the builder. Instead, builders should advise otherwise qualifying homebuyers to apply for the rebate directly with the CRA, at least until the legislation is finalized. The new rebate form is expected to be published by CRA by mid-summer, so builders and homebuyers are in limbo until that point. However, there is a 2-year window to claim the rebate, after the tax is paid to the builder.
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