What’s Changing?
Budget 2025 proposes a First-Time Homebuyers’ Goods and Services Tax (GST) Rebate, aiming to ease the large upfront costs for new homes. Fully eligible buyers of new homes valued at up to $1 million would pay no GST, and those purchasing new homes between $1 million and $1.5 million would receive partial relief, with the rebate gradually phasing out. (canada.ca)
Qualification Rules
To qualify for the rebate, you must meet several criteria:
- Be a first-time homebuyer, defined as someone who has not lived in a home owned by themselves or their spouse/common-law partner in the current or past four years. Must be 18+ and a Canadian citizen or permanent resident. (canada.ca).
- The home must be a new build, a newly built home from a builder, a co-op share unit, or built on your own land under specified conditions. Construction must begin and be completed according to rules (agreement date “entered into” with builder after May 27, 2025; construction begun before 2031; substantial completion before 2036). (canada.ca).
- Homes «between $1,000,000 and $1,500,000» get partial GST relief, with phasing as value increases. No benefit if price is $1.5 million or more. (canada.ca).
How Big Is the Benefit?
| Home Price | GST Before | GST Rebate | Net GST Payable |
|---|---|---|---|
| $900,000 | 5% | 100% | $0 |
| $1,200,000 | 5% | ~50% rebate | ~$15,000 |
| $1,600,000 | 5% | None | Full GST applies |
Estimated fiscal impact: $3.9 billion over five years starting 2025-26. (canada.ca)
Timing & Legislative Status
The measure is proposed; it's included in Bill C-4 (“Making Life More Affordable for Canadians Act”). It is not yet law, and must pass Parliament. Home purchase contracts, construction start dates, and completion dates all play into eligibility. (canada.ca)
Examples
- Alice, first‐time buyer in Toronto, buys a newly built home for $950,000. Total GST would have been $47,500, but under the rebate, she pays $0 GST. Savings: $47,500.
- Ben & Clara, first‐time buyers purchasing a $1.2 million condo. Full GST at 5%: $60,000. Rebate is phased; likely around 50% relief, saving $30,000. Net GST payable: ≈$30,000.
- Diana, with different provinces/territories or older homes—if it's a resale home, the GST rebate doesn't apply. { indicates that rules of the New Housing Rebate or provincial HST rules will still matter.
Planning Tips Before Buying
- Ensure the agreement with the builder is entered into after May 27, 2025. Check anticipated construction start and completion dates. (canada.ca).
- Determine if you've owned a home in past 4 years to confirm first‐time status.
- Understand provincial HST/GST components—this is a rebate on the federal GST or federal part of HST only. Provincial portion remains unless separately addressed. (canada.ca).
- Work with a real estate lawyer or tax advisor to confirm eligibility conditions.
Why It Matters
- The upfront cost of new housing is often the largest barrier; this rebate can meaningfully reduce down payments or closing costs.
- It encourages new construction by shifting demand toward newly built homes, aligning with policy goals to increase housing supply. (budget.canada.ca).
- Puts cash savings in the hands of first-time buyers, helping affordability.
This proposed GST rebate is a potential game-changer for anyone planning to buy a new home in the near term. If you're considering becoming a homeowner, especially a first-time buyer, planning ahead could save you tens of thousands of dollars.