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GST Relief on New Homes

GST Relief on New Homes

May 30, 2025 Update – Government indicates CHBA assumptions on implementation details likely accurate, more info to come

After extensive follow-up with the Department of Finance and CRA, CHBA has received informal confirmation that our expectations of how the new GST rebate for first-time home buyers (named the “FTHB GST Rebate”) will be rolled out (as explained in the May 29 update below) are accurate, and the government will be updating its website sometime next week to that effect.

The current word from the government is that it will likely be several weeks for the official forms to be available. CHBA has communicated the problems this will cause, especially for existing inventory. Alternative options, including the potential of providing the information to CRA without the form to secure the rebate, should be provided when the government updates its website next week.

CHBA continues to urge the importance of the government having this information, the updated form, and the related resources, available as soon as possible. CHBA also continues to advocate for a broadening of the GST relief (again, as per below), and will keep members informed of any new developments.

Questions on the forms and process can be submitted to CRA at GSTHSTRulingsFIRPLPRAB-DecisionsTPSTVHIFIDGPLAR@cra-arc.gc.ca.

 

May 29, 2025 Update – CHBA still pushing for GST details and broader application

Following Tuesday’s announcement of GST relief for new home construction, we have received questions from members asking for more details around the implementation, and about the potential for broader application of the GST to all buyers and higher-priced homes moving forward.

This email will address both topics as best as we can right now with the current information from the government.

Recap: What has been announced
There will be a new GST rebate for first-time home buyers (named the “FTHB GST Rebate”), which will remove the GST on new homes at or under $1 million and lower it on homes between $1 million and $1.5 million for all first-time home buyers. This is in line with what the Liberal Party promised in their election platform. It’s worth noting that this originally was only to apply to homes up to $1M, and CHBA’s engagement during the election campaign helped to get the additional relief up to $1.5M; CHBA also pushed for higher limits in more expensive markets and for it to apply to all buyers, but that was not successful, yet – CHBA continues to push. The effective date is May 27, 2025 (see below for details on implementation).

Details on implementation of GST

  • Implementation date
    • The official government language says “The FTHB GST Rebate would generally be available if the agreement of purchase and sale for the home is entered into with the builder on or after May 27, 2025 and before 2031.”
    • There have been questions from members about whether this means when the contract was written, or when the date of sale is, or whether it’s at the time of removal of conditions (such as subject to financing).
    • CHBA is seeking details and specifics from the Department of Finance and Canada Revenue Agency (CRA) on the exact definition of “date on which agreement of purchase and sale is entered.” [Update May 30: CRA information on this is still pending as final determination has not yet been made]
  • Administrative details, particularly the claim process (including confirming first-time buyer status)
    • There is limited information on the administrative process at this point in what has been announced. CHBA is engaged with the Department of Finance and CRA on this and expressing the urgent need for details given the need for clarity for members and buyers to proceed with confidence.
    • WE DO NOT KNOW FOR SURE, but our expectation is that it will work exactly like the current GST rebate process, including enabling builder-assigned rebates (i.e. the buyer’s ability to sign over the rebate to the builder so that the purchase price can be lower to assist in mortgage financing, and the builder can claim the rebate). We would expect there would be an updated version of the Form GST190, GST/HST New Housing Rebate Application for Houses Purchased from a Builder, with some additional check boxes around first-time buyer claim eligibility (just as there is already a requirement for the purchaser to confirm that the home to be a principal residence). We would also expect that with that certification on the form signed by the buyer, there will be no liability on the builder if the buyer is later somehow incorrect on their first-time buyer status, given that builders are not in a position to confirm that. [May 30 Update: an updating of the form, with FTHB information is indeed the plan, with certification signature absolving the builder (unless of course there is collusion or negligence, as is always the case with tax law)]
    • We expect this relief will continue to apply to substantial renovations as well, as the government has stated that “FTHB GST Rebate will apply to the same types of housing and apply similar eligibility criteria.” [May 30 Update: confirmation still pending]
    • However, all of this is only our interpretation, which is consistent with what has been published thus far, but no such detail is provided in any of the current documentation yet. We will provide official information/confirmation as soon as we have it. [May 30 Update: verbal confirmation from CRA per above; express confirmation expected on CRA web site next week.]

 

CHBA’s recommendations to expand the GST relief

Per our note on the announcement, rest assured that CHBA continues to push for expanded GST relief, as we have been doing since prior to the election (and during the election, our efforts resulted in the Liberals changing their original relief only for homes up to $1M, to additional relief up to $1.5M).

We have recognized since the platform announcement that all buyers should have access to this relief and that in Canada’s most expensive markets, even the $1.5M threshold is not high enough.

To that end, CHBA has also been pressing for the GST exemption to be adjusted to be:

  • for all homebuyers, not just first-time buyers;
  • in more expensive markets, increased thresholds to $1.5 and $2.0M;
  • adjusted to have an effective eligibility date based on closing, not time of purchase and sale; and
  • applicable to Accessory Dwelling Units (ADUs) and secondary suites, which are important forms of new housing.

These points were reflected in our media release, and are part of our ongoing engagement with both media and the government. At the same time, it was very important that the announced plans be implemented asap, as we know many sales were being held up, further slowing the market at a time when industry could ill afford more complications. To that end, it was an important step to get clarity and the market moving (and granted the above questions still need to be answered), at least for those first-time buyers who will now qualify and make their purchases.

What’s Next

CHBA will continue to press for details and clarification on the implementation of the announced GST Rebate, and to expand the GST relief. We will notify members when additional details are provided by the government.

 

 

May 27, 2025 – Win for CHBA members: Federal government officially announces GST relief for first-time buyers, effective immediately

After consistent engagement by CHBA over the last few years, and a major push with the newly elected government, the federal government has followed through with its election promise to introduce a new GST rebate for first-time home buyers (named the “FTHB GST Rebate”), which will remove the GST on new homes at or under $1 million and lower it on homes between $1 million and $1.5 million for all first-time home buyers, effective May 27, 2025. The move should get prospective first-time buyers who were waiting on the sidelines for more details to get into the market, spurring sales and housing supply.

In the government Backgrounder supporting the Ways and Means motion, for new homes purchased from a builder, the GST rebate would allow an individual to recover up to $50,000 of the GST (or the federal part of the HST) paid in respect of a new home purchased from a builder (including on leased land).

To qualify for a FTHB GST Rebate, at least one of the purchasers of the home would need to be a “first-time home buyer” that is acquiring the new home for use as their primary place of residence. That individual would also need to be the first individual to occupy the home as a place of residence.

The FTHB GST Rebate would generally be available if the agreement of purchase and sale for the home is entered into with the builder on or after May 27, 2025 and before 2031.

The measure was tabled just a couple hours after this morning’s Throne Speech. Introduced through a Notice of Ways and Means Motion, this will need to be approved by the House of Commons. It is expected that this will happen without difficulty. The only way this would not move forward would be if the government fell in this first legislative process, which is extremely unlikely as there is no appetite for another election any time soon. As a result, industry and buyers can move forward with confidence.

CHBA issued a follow-up press release applauding the government’s quick action, but reiterating CHBA’s recommendation to extend the GST relief policy to all buyers of new homes to enable move-up buyers to purchase new homes and ensure a further boost of housing supply, freeing up entry-level homes for first-time buyers in the existing housing market. CHBA is also recommending to include Accessory Dwelling Units (ADUs) and secondary suites, which are important forms of new housing.

Moreover, the relief should be applicable to all new homes under the thresholds whose sales have not closed (i.e., where legal ownership of the property has not yet transferred to the buyer). If not, there will be many frustrated Canadians who have signed purchase and sale agreements already and will not be eligible but are a long way off from taking possession of their home which may not even be under construction yet.

CHBA will continue to engage with the federal government on this and other recommendations. While CHBA still has recommended revisions to extend eligibility of the GST relief per above, this announcement is a big win after years of advocacy on the GST, and will get first-time buyers buying now.

 

Details About the GST Rebate for first-time home buyers (the “FTHB GST Rebate”)

  • Available to first-time home buyers (FTHB), defined by the government as:
    • at least 18 years of age;
    • either a Canadian citizen or a permanent resident of Canada; and
    • has not have lived in a home, whether in or outside Canada, that they owned or that their spouse or common-law partner owned in the calendar year or in the four preceding calendar years.
  • Eligible for FTHB who:
    • buy a new home from a builder;
    • build, or hire someone else to build, a home on land the FTHB owns or leases; or
    • buy shares of a co-operative housing corporation.
  • Together with the existing GST/HST New Housing Rebate (where that rebate is applicable), the FTHB GST Rebate would provide for a rebate of 100% of the GST on new homes valued up to $1 million.
  • The FTHB GST Rebate would be phased out in a linear manner for new homes valued between $1 million and $1.5 million. For example, under the linear phase-out, a home valued at $1.25 million would be eligible for a 50% GST rebate (a rebate of up to $25,000).
  • No FTHB GST Rebate would be available for new homes valued at or above $1.5 million.

 

 Details About New Homes Purchased from a Builder

  • The FTHB GST Rebate would allow an individual to recover up to $50,000 of the GST (or the federal part of the HST) paid in respect of a new home purchased from a builder (including on leased land).
  • To qualify for a FTHB GST Rebate, at least one of the purchasers of the home would need to be a “first-time home buyer” that is acquiring the new home for use as their primary place of residence. That individual would also need to be the first individual to occupy the home as a place of residence.
  • The FTHB GST Rebate would generally be available if:
    • the agreement of purchase and sale for the home is entered into with the builder on or after May 27, 2025 and before 2031; and
    • construction of the home begins before 2031 and the home is substantially completed before 2036.
    • Note: If an agreement of purchase and sale for a new home was originally entered into before May 27, 2025 and the agreement is subsequently cancelled and a new agreement of purchase and sale is entered into (or the agreement is varied or altered to effect that outcome), the FTHB GST Rebate may be disallowed in respect of the sale of a new home under the new agreement (and would not be allowed in respect of the varied or altered agreement). CHBA commentary: it is unclear how the government would track this.