First-Time Home Buyers’ GST Rebate

First-Time Home Buyers’ GST Rebate

On May 27, 2025, the Canadian government introduced a significant policy aimed at easing the financial burden of homeownership for first-time buyers. The First-Time Home Buyers’ GST Rebate (FTHB GST Rebate) eliminates or reduces the Goods and Services Tax (GST) on newly constructed homes valued up to $1.5 million, offering savings of up to $50,000. This initiative, tabled by Minister of Finance and National Revenue François-Philippe Champagne, is designed to make homeownership more accessible for young Canadians and stimulate new home construction across the country. Here’s a detailed look at the rebate, its eligibility criteria, application process, and potential impact.

Overview of the FTHB GST Rebate

The FTHB GST Rebate is a temporary tax relief program that removes the GST (or the federal portion of the Harmonized Sales Tax, HST) on qualifying new homes purchased by eligible first-time buyers. Announced as part of the Liberal government’s 2025 election promises, the rebate is expected to deliver $3.9 billion in tax savings over five years, starting in the 2025-26 fiscal year. It applies to a variety of new home purchases, including:

• Homes bought directly from builders
• Owner-built homes
• Shares in co-operative housing corporations
• Substantially renovated homes

The rebate structure is tiered based on the home’s value:

• Homes valued up to $1 million: Eligible buyers receive a 100% GST rebate, saving up to $50,000.
• Homes valued between $1 million and $1.5 million: The rebate is phased out linearly. For example, a $1.1 million home qualifies for an 80% rebate ($40,000), while a $1.25 million home receives a 50% rebate ($25,000).
• Homes valued at $1.5 million or more: No rebate is available.

This policy builds on the existing GST New Housing Rebate, which is available to all eligible buyers of new homes, regardless of first-time status, but the FTHB GST Rebate offers additional relief specifically for first-time buyers.

Eligibility Criteria

To qualify for the FTHB GST Rebate, buyers must meet specific conditions:

• First-Time Buyer Status:
  • The buyer (or at least one co-purchaser) must not have lived in a home they owned, or that their spouse or common-law partner owned, in Canada or elsewhere, during the calendar year of the purchase or the four preceding years.
  • The rebate can only be claimed once per individual, and it is not available if the buyer’s spouse or common-law partner has previously claimed it.
• Purchase Agreement Timing:
  • The agreement of purchase and sale with the builder must be signed on or after May 27, 2025, and before December 31, 2030. Agreements signed before May 27, 2025, do not qualify, even if the home is completed later.
  • If an agreement is canceled and a new one is signed on or after May 27, 2025, the rebate may be disallowed if it is deemed a variation of the original agreement.
• Construction and Completion:
  • Construction of the home must begin on or after May 27, 2025, and be substantially completed (at least 90%) by December 31, 2035.
  • For owner-built homes, at least one owner-builder must qualify as a first-time buyer, and the same construction timeline applies.
• Home Type and Use:
  • The home must be a newly constructed or substantially renovated residential property, including single-family homes, condos, or co-operative housing shares.
  • The buyer must intend to use the home as their primary residence.

Limitations and Considerations

The FTHB GST Rebate has some restrictions that buyers should be aware of:

• Pre-May 27, 2025 Agreements: Buyers who signed agreements before May 27, 2025, are not eligible, even if they anticipated the rebate based on earlier government announcements on March 20, 2025. This has drawn criticism, as some buyers may have acted in anticipation of the rebate.
• Assignment Sales: If a buyer assumes an agreement signed before May 27, 2025, via an assignment sale, the rebate is not available.
• Spousal Restrictions: The rebate cannot be claimed if a spouse or common-law partner has previously used it, limiting its availability for couples.
• High-Value Homes: Homes priced at $1.5 million or more are excluded, which may limit benefits in high-cost markets like Vancouver or Toronto. Some industry groups, like the Canadian Home Builders’ Association (CHBA), advocate for raising the threshold to $1.5 million for full relief and $2 million for phased relief to better address these markets.
• Temporary Nature: The rebate applies only to agreements signed before 2031, with construction completed by 2036, making it a time-limited benefit.

Check our other blogs under Real Estate 101 – that might give you answers about buying or selling a home.

The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.