What’s the new relief?
- Under proposed Bill C-4, Canada aims to eliminate GST entirely on new homes valued up to $1 million and reduce GST on new homes priced between $1 million and $1.5 million for first-time home buyers. (canada.ca)
- This could equate to up to $50,000 in tax savings, depending on GST rate and purchase price. (canada.ca)
Who qualifies?
- Must be a first-time home buyer under Canada’s definition (haven’t owned a home in the past four years or more – check CRA for specifics).
- The purchase must be for a new home (builder-purchased or newly constructed) valued up to $1.5 million.
- The agreement of purchase must be signed on or after May 27, 2025, and construction must start before 2031 with substantial completion before 2036. (canada.ca)
How the savings work
| Home Price | GST Relief for FTHB | Max Potential Savings* |
|---|---|---|
| $900,000 new home | GST eliminated (5%) | ~$45,000 savings |
| $1,200,000 new home | GST partially reduced on portion over $1M | ~$10,000-$25,000 savings |
| $1,400,000 new home | Reduction only on lower bracket above $1M | lesser savings |
| *Depending on provincial taxes but federal part only |
Timing and process
- The measure becomes effective based on Bill C-4; purchase agreement entered May 27, 2025 onwards. (canada.ca)
- Expect relief at closing or on GST rebate applications.
- Builders / sellers will need to factor reduced or eliminated GST into contracts.
Practical Tips for Home Buyers
- When negotiating or planning purchase, confirm contract clause around GST relief.
- For homes $1-1.5M, builders may adjust price to reflect partial GST reduction – watch fine print.
- Talk to mortgage brokers & lawyers to include GST relief calculations in affordability models.
Example
Lisa, first-time buyer, purchases a new home worth $900,000: normal GST 5% = $45,000. Under relief, she pays no GST federal portion. Provincial sales taxes or HST-local portions may still apply depending on province.
Mark buys a new home for $1,300,000: For first $1 million, GST eliminated. On remaining $300,000 portion, reduced GST rate applies. Saves significantly but less than complete relief.
Things to verify
- Builder’s eligibility to provide relief.
- That purchase agreement and construction timelines align with proposed regulations.
- Any provincial-level taxes or rebates that may affect final costs.
Sources: Canada.ca, Budget 2025 materials, Department of Finance briefings (canada.ca)