Understanding the GST Savings on New Homes (and What’s Next for Housing Affordability in Canada)
Buying a home — especially your first home — is one of life’s biggest milestones. It’s equal parts exciting and overwhelming, and every dollar counts when you’re balancing down payments, closing costs, and mortgage approvals.
Thankfully, recent federal changes are easing that financial load for many Canadians. Here’s what you need to know about the new GST relief on homes — and what broader affordability changes may be coming next.
The Federal GST Rebate for First-Time Buyers
Under the federal government’s new plan, eligible first-time homebuyers can now recover up to $50,000 of the GST (or federal portion of the HST) on qualifying new home purchases. At Starward Homes, this translates to lower prices as the GST is no longer added to the total price of a newly built home for a first-time homebuyer.
The breakdown for savings on new homes for a first-time homebuyer:
- Full rebate: Homes priced at $1 million or less are eligible for a 100% rebate of the federal tax (up to a maximum of $50,000).
- Partial rebate: For homes priced between $1 million and $1.5 million, the rebate gradually phases out.
- No rebate: Homes priced above $1.5 million don’t qualify for the federal rebate.
To qualify, buyers must meet the government’s first-time homebuyer definition:
Be a Canadian citizen or permanent resident.
- Not have owned a home (or had a spouse who owned one) in the current or previous four calendar years.
- Intend to live in the home as their primary residence.
These rules apply to newly built or substantially renovated homes, with agreements signed between May 27, 2025 and 2031 and construction completed by 2036.
New Homes vs. Resale Homes: What’s Taxed and What’s Not
- New homes: When you buy a brand-new home from a builder, GST/HST is applied to the purchase price — which means you can take advantage of the new federal rebate if you’re a first-time buyer.
- Resale homes: Generally, resale (previously owned) homes are exempt from GST/HST, meaning there’s no tax charged — which also means no rebate to claim.
So, while resale homes aren’t subject to GST, the new incentive makes brand-new homes more attractive than ever, particularly when you consider energy efficiency, builder warranties, and modern design standards.
The Bigger Picture: Expanding Affordability for All Canadians
The conversation on affordability doesn’t stop at first-time buyers. Provincially, the Ontario government is considering removing GST/HST entirely from new home purchases — for everyone, not just first-time buyers.
If approved, this would represent a major step toward addressing housing affordability, helping buyers of all ages and life stages enter (or re-enter) the housing market with more confidence.
Don’t Forget the Mortgage Stress Test
Even with these new incentives, every buyer in Ontario must still qualify for their mortgage under Canada’s “stress test.”
That means lenders will calculate your eligibility based on the greater of:
- The rate offered by your lender, plus 2%, or
- The Bank of Canada’s qualifying rate (currently 5.25% at time of writing).
This ensures you can manage your payments if rates rise — but it also means buyers should be prepared for stricter approval criteria. Working with a mortgage professional early in the process is the best way to understand exactly where you stand.
In Summary
Between the federal GST rebate, potential provincial tax relief, and builder-driven affordability initiatives, Canada is taking meaningful steps toward making homeownership more achievable.
For first-time buyers, these programs can translate into tens of thousands of dollars in savings. For everyone else, the policy momentum points toward a more inclusive and balanced market in the years ahead.
Whether you’re buying your very first home or your forever home, Starward Homes is proud to help you navigate this evolving landscape — with transparency & expertise.
Starward Homes
Building confidence, one home at a time.
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