Tax Planning
How First-Time Home Buyers Can Save GST/HST on New Homes in Canada Today
Starting in 2026, first-time home buyers in Canada may no longer pay GST on many new homes under $1 million—this change can mean huge savings; here’s what qualifies and how to plan.
By NomadicTax Research Team • 5-8 min read • July 6, 2026
## What’s changing now for first-time home buyers?
As part of the Spring Economic Update of 2026, Canada has **eliminated the Goods and Services Tax (GST)** on **new homes valued up to \$1 million** for first-time home buyers. Homes priced between \$1 million and \$1.5 million receive a **reduced GST rate**. This applies to agreements of purchase and sale entered into on or after May 27, 2025. ([budget.canada.ca](https://budget.canada.ca/update-miseajour/2026/report-rapport/intro-en.html?utm_source=openai))
## Who qualifies as a first-time home buyer?
To benefit:
- You must be a **first-time buyer**, meaning you (and your spouse/common-law partner) did **not** own a home anywhere in the world in the past few years (rules can vary by province).
- The home must be **new construction**, meaning newly built homes, or substantial renovations or homes never occupied. Resale homes generally don’t qualify for this GST relief.
- Agreement of purchase **must have been entered into as of** May 27, 2025, to qualify. ([budget.canada.ca](https://budget.canada.ca/update-miseajour/2026/report-rapport/intro-en.html?utm_source=openai))
## How much you can save — example scenarios
| Scenario | Home price | GST rate | GST amount saved |
|---|---|---|---|
| Home priced at \$900,000 | Under \$1 million | GST = 0% | Save the full GST—approx. \$45,000 if 5% GST would normally apply |
| Home priced \$1,200,000 | Between \$1 million & \$1.5 million | Reduced GST (partial relief) | Save part of the GST—depends on province and exact price split |
| Home over \$1,500,000 | Above limit | No GST relief | No savings under this measure |
## Regional differences to watch out for
While the federal relief is on GST, **provincial sales tax (PST)** or **Harmonized Sales Tax (HST)** may still apply depending on province. First-time buyer programs and rebates at the provincial level may offer additional relief.
## Actionable steps for planning
1. **Check the agreement date** — ensure the purchase agreement for the new home was signed **on or after May 27, 2025**. If earlier, this relief likely won’t apply.
2. **Get a GST/HST specialist** — confirm definitions of "new home" and whether your purchase qualifies in your province.
3. **Estimate the tax relief** — calculate GST at 5% and compare to zero GST to understand your savings. If in the partially relieved band, work out the reduced liability.
4. **Plan financing accordingly** — by saving on GST, your required down payment or mortgage amount may be lowered—use the relief in your financial plan.
5. **File correctly** — when closing on the home, ensure you take the correct calculation in billing; your builder should invoice with GST relief.
## Why this matters
This measure significantly reduces upfront costs for first‐time buyers, particularly in hot markets where GST alone represents tens of thousands of dollars. It aligns with the government’s broader affordability objective and can make home ownership more accessible.
If you’re considering a purchase in the \$800,000–\$1.3 million range, running the numbers makes it clear this change could shift your budget by a meaningful margin.