New GST Rebate for First-Time Home Buyers: What You Need to Know

In a move to push for affordable housing and increase new home construction across Canada, the Canadian federal government has eliminated the Goods and Services Tax (“GST”) for first-time home buyers on new homes. This new incentive is known as the First-Time Home Buyers GST Rebate (the “FTHB GST Rebate”), and is aimed at easing the burden of homeownership and encouraging new housing construction.

What's Changing?

On May 27, 2025, the Minister of Finance and National Revenue, the Honourable François-Philippe Champagne, tabled legislative proposals to amend the Excise Tax Act, 1985 to introduce the FTHB GST Rebate. The FTHB GST Rebate, together with existing rebate programs, will provide for a rebate of 100% of the GST on new homes valued up to $1 Million Dollars. For new homes valued between $1 Million Dollars and $1.5 Million Dollars, the rebate will be phased out linearly. The FTHB GST Rebate will not apply to new homes valued at $1.5 Million Dollars, or more.

The FTHB GST Rebate applies to purchase and sale agreements signed on or after May 27, 2025, with construction beginning before 2031.

Homes That Qualify

If you are a first-time home buyer, you may be eligible for the FTHB GST Rebate if you:

1. purchase a new home from a builder;
2. build, or hire someone else to build a home on land you own or lease; or
3. purchase shares of a co-operative housing corporation.

Purchaser Eligibility

To be considered a first-time home buyer for the purposes of the FTHB GST Rebate, you must meet the following conditions:

1. be at least 18 years of age;
2. be a Canadian citizen or permanent resident; and
3. not have lived in a home, in or outside of Canada, that was owned by you or your partner in the last four calendar years.

Important Limitations

The FTHB GST Rebate is strictly limited to a one-time use and cannot be claimed more than once in a lifetime. If a spouse or common-law partner has previously claimed the FTHB GST Rebate, you are not eligible to apply. Furthermore, any purchase and sale agreements signed before May 27, 2025 are ineligible for the FTHB GST Rebate, even if they are later modified or reassigned.

In Conclusion 

The FTHB GST Rebate is expected to provide $3.9 Billion Dollars in tax relief for first-time home buyers over five years beginning in 2025-26, and will allow eligible first-time home buyers to save up to $50,000 Dollars on a new home.

Combined with other federal housing initiatives, this measure encourages builders to focus on mid-market homes where demand is rising and allow young professionals and families the opportunity to access a difficult market.

If you have any questions about whether you are eligible for the FTHB GST Rebate or for assistance with a real estate-related matter, please reach out to a member of SV Law’s Real Estate Group.