What Canada’s New GST Relief for First-Time Home Buyers Means for Buyers and Sellers

There has been a major rule change from the Government of Canada that could make it easier for some first-time buyers to get into the market — and it could also create new opportunities for sellers, especially in the new-construction space.

The new First-Time Home Buyers’ GST/HST Rebate eliminates the GST (or the federal portion of HST) on qualifying new homes priced up to $1 million, and provides a partial rebate on qualifying new homes priced between $1 million and $1.5 million. The maximum savings can be as high as $50,000.

What changed?

For eligible first-time buyers, the federal government has effectively created a much more generous GST rebate for qualifying new homes. Homes at or below $1 million can qualify for a 100% rebate of the GST or federal part of the HST, while homes between $1 million and $1.5 million qualify for a reduced rebate. Homes at $1.5 million or more do not qualify for this new rebate.

This applies to eligible homes bought from a builder, certain owner-built homes, substantially renovated homes, and some co-op housing situations, provided the other criteria are met. Agreements generally must have been entered into on or after March 20, 2025, and before 2031, with completion before 2036.

Who qualifies as a first-time buyer?

In general, a buyer must be:

• at least 18

• a Canadian citizen or permanent resident

• someone who has not lived in a home they owned — or that their spouse/common-law partner owned — in the calendar year of possession or the previous four calendar years.

That “four previous calendar years” rule is important. Some people may think they are not first-time buyers anymore, but depending on when they last owned and occupied a home, they may now qualify again.

What this means for buyers

For buyers trying to break into the market, this is meaningful.

A rebate of up to $50,000 can reduce the amount of cash needed to close, improve affordability, and make certain new-build purchases more realistic. In practical terms, that can mean:

• more flexibility on purchase price

• more room in the budget for upgrades, blinds, appliances, landscaping, or moving costs

• a lower barrier to choosing a new home over an older resale property

It is also important to understand what this does not do: this is not a blanket GST exemption on all homes. It is targeted to qualifying new or substantially renovated homes, not typical resale homes.

Another helpful feature is that builders may be able to credit the rebate at closing, rather than forcing buyers to wait and recover it later. If the builder does not credit it, eligible buyers can apply directly to CRA. CRA says applications are now being accepted, and buyers generally have two years from taking ownership or finishing construction to apply.

What this means for sellers

For sellers, the impact depends on the type of property being sold.

If you are selling a brand new home, pre-construction home, substantially renovated property, or builder product, this rule could expand your buyer pool. Some first-time buyers who were previously priced out may now be able to stretch further, especially at price points under $1 million or within the $1 million to $1.5 million rebate phase-out range.

That can mean:

• stronger demand for qualifying new-build inventory

• more urgency from first-time buyers

• better positioning for builders and sellers competing against resale homes

For resale sellers, the effect is more indirect. A buyer comparing a resale home to a qualifying new-build may now see greater value in the new-build option because of the tax savings. That does not mean resale homes are in trouble, but it does mean resale sellers may need to work harder on pricing, presentation, condition, and overall value proposition.

The bigger picture

This policy is designed to help first-time buyers enter the market and to encourage new housing construction. For buyers, it can create a real financial advantage. For sellers and builders, it may bring more first-time buyers back into the conversation.

The key is understanding whether the property actually qualifies and whether the buyer truly meets the first-time buyer test. This is one of those rule changes that sounds simple in a headline but can be very specific in real life.

Bottom line

If you are a first-time buyer considering a new home, this change could save you a substantial amount of money.

If you are a seller or builder with a qualifying property, this rule may make your home more attractive to a larger group of buyers.

And if you are selling a resale home, it is worth understanding how this new incentive may shape buyer behavior in your market.

Before making a move, buyers should confirm eligibility with their accountant, lawyer, builder, or mortgage professional, because the fine print matters.

Steve Throndson | Real Estate Advisor

250.919.3366 | Steve@ThrondsonRealty.com