The federal government’s GST rebate for first-time home buyers has now come into force after Bill C-4 received royal assent to introduce a tax measure aimed at reducing the cost of buying new-build homes. The legislation eliminates the goods and services tax on new homes priced up to $1 million for eligible first-time buyers and reduces the tax on homes priced between $1 million and $1.5 million. The measure is intended to help more Canadians enter the housing market and encourage additional housing construction.
The tax change follows almost a year of anticipation after the federal government first announced its intention to introduce GST relief for first-time buyers of newly built homes. During that time, the proposal went through several legislative phases, with delays sparking criticism from housing industry associations who argued that uncertainty was deterring potential buyers from committing to a purchase. The Canadian Home Builders’ Association (CHBA) repeatedly called on the government to move forward with the legislation, claiming that many potential buyers have been waiting for the rebate to be introduced.
Toronto skyline, image by Skycandy, UrbanToronto forum contributor
Under the measure, qualified first-time buyers purchasing newly built homes would receive a full rebate on federal GST for homes priced up to $1 million, with a partial rebate applicable for homes priced between $1 million and $1.5 million. The program is designed to reduce the cost of entering the new home market and provide potential savings of up to $50,000. Federal officials have defined the initiative as a way to increase access to homeownership for younger households and families while supporting the construction of additional housing.
Eligibility is tied to the timing of the purchase agreement and applies to homes where the purchase and sale agreement was signed between March 20, 2025 and before 2031. Buyers who took possession of their homes prior to royal assent must apply for the rebate directly with the Canada Revenue Agency (CRA), while builders will soon be able to claim the credit at the time of sale once the necessary forms are in place. According to CHBA, the CRA expects the documentation to be available within a few days and will also host a webinar to inform builders about the updated process.
Throughout the legislative process, CHBA continued to press federal officials to advance the bill, arguing that clarity about the rebate would help re-engage buyers and support the construction of new homes. At the same time, the association has called on the government to extend the policy beyond first-time buyers and suggests that the GST relief applies to all buyers of newly built homes. Industry groups contend that including residential downsizing and downsizing would stimulate additional development activity and free up entry-level homes on the resale market.
The association has also proposed expanding eligibility to renovations that add new housing units, citing examples such as accessory dwelling units and accessory dwelling units. Inclusion of such projects in the GST relief framework could help boost activity in the renovation sector and support the creation of additional housing opportunities, according to industry officials.
With the legislation now in force, the housing industry expects the rebate will also impact purchasing decisions that were put off while buyers waited for clarity on the tax change.
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