On May 27, 2025, the federal government announced a major improvement to the GST/HST rebate for first-time buyers of new or substantially renovated homes. This measure is designed to facilitate access to home ownership for first-time homebuyers, by eliminating or reducing the GST (or the federal portion of the HST) on the purchase or construction of a new home, when the limits relating to the value of the home are respected.
Objective and scope of the measure
The enhanced rebate is designed to provide tax relief to eligible individuals acquiring or building their first new home. Specifically, the proposed rebate would be 100% of the GST paid (or the federal portion of the HST paid) for a new home valued up to $1 million, with a declining rebate for homes valued between $1 million and $1.5 million. No rebate would be available for new homes valued at $1.5 million or more.
Please note, however, that this bill has not yet received Royal Assent, and the refund is not yet available.
Eligibility criteria
To qualify for the bonus, first-time homebuyers must meet all of the following conditions:
- Be at least 18 years old;
- The dwelling must serve as his or her habitual residence (not just that of a family member), and he or she must be the first to occupy it;
- Be a Canadian citizen or permanent resident within the meaning of the Immigration and Refugee Protection Act;
- Not have occupied, in Canada or abroad, a dwelling owned by him/her (or by his/her spouse/common-law partner) as his/her usual place of residence (reside on a permanent basis) during the calendar year or the four preceding calendar years;
- The individual, spouse or common-law partner must not have previously received a GST/HST rebate for first-time homebuyers.
Eligible housing types
The refund applies to the following situations:
- Purchase of a new home from a builder (detached or semi-detached single-family home, condominium unit, etc.);
- Construction or major renovation of a home by an individual or contractor;
- Purchase of a share of the capital stock of a housing cooperative entitling the holder to own a residential housing unit.
In addition, the agreement for the sale of the home must be entered into after March 19, 2025 and before January1, 2031. In this regard, Bill C-4, tabled on October 29, 2025, gave retroactive effect to the proposed new measures, while CRA publications, which have not been updated, still refer to May 27, 2025 as the potential effective date of the bonus.
Construction or major renovations must begin before 2031, be substantially completed before January1, 2036, and the transfer of ownership must take place before January1, 2036.
Refund calculation
- For a new home costing $1 million or less: 100% GST rebate (up to $50,000);
- For homes between $1 million and $1.5 million: declining balance rebate, based on the following formula: rebate = $50,000 × [$1.5 million – purchase price] ÷ $500,000;
- For homes worth $1.5 million or more: no refund.
Examples:
- 900,000 home: 100% GST rebate, or $45,000;
- 1,250,000 home: $25,000 rebate, i.e. 50% of the maximum $50,000 rebate;
- Dwelling valued at $1,500,000 or more: no refund.
Limits and restrictions
- Only one lifetime claim for each eligible purchaser or their spouse or common-law partner;
- Sales contracts concluded before March 20, 2025 are not eligible for reimbursement, even if they are cancelled or modified after this date. Anti-avoidance rules apply to prevent recharacterization of existing contracts.
How to apply
- Once the bill has received Royal Assent, reimbursement can be requested directly by the purchaser or credited by the manufacturer;
- Individuals acquiring new or substantially renovated homes before the bill receives Royal Assent will be required to pay GST/HST to the builder. Builders will only be allowed to credit the new housing rebate currently in effect. After Royal Assent, individuals will be able to apply directly to the CRA for the enhanced rebate.
Builders wishing to credit any rebate will need to ensure that their purchaser meets all the conditions, as builders could be held jointly and severally liable for the rebate if purchasers were not entitled to it.
In other provinces
The Ontario government confirmed on October 28, 2025 that it will also provide HST rebates based on federal criteria (for example, the rebate would be limited to $24,000 for a property valued between $1.35 million and $1.5 million).
In a nutshell
While the enhanced GST/HST rebate for first-time homebuyers is an excellent measure for stimulating the economy and facilitating access to home ownership for eligible individuals, particular attention must be paid to documenting eligibility conditions and respecting the prescribed deadlines to ensure that the rebate is not called into question.
An article from our Consumption Taxes team
