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First-Time Home Buyers’ GST Relief: Up to $50,000 Savings on New Homes
If you’re buying a new home as a first-time buyer, new federal tax relief on GST could save you tens of thousands — here’s eligibility, breakdowns, and timing.
By NomadicTax Research Team • 5-8 min read • November 22, 2025
## 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](https://www.canada.ca/en/department-finance/corporate/transparency/2025/cow-cp-scenario-notes-eng.html?utm_source=openai))
- This could equate to up to **$50,000 in tax savings**, depending on GST rate and purchase price. ([canada.ca](https://www.canada.ca/en/department-finance/corporate/transparency/2025/cow-cp-scenario-notes-eng.html?utm_source=openai))
## 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](https://www.canada.ca/en/department-finance/corporate/transparency/2025/cow-cp-scenario-notes-eng.html?utm_source=openai))
## 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](https://www.canada.ca/en/department-finance/corporate/transparency/2025/cow-cp-scenario-notes-eng.html?utm_source=openai))
- 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](https://www.canada.ca/en/department-finance/corporate/transparency/2025/cow-cp-scenario-notes-eng.html?utm_source=openai))