First-time homebuyers receive a GST deduction on new homes up to $1.5 million

In an effort to reduce the upfront costs of buying a new home for young Canadians and to boost new home construction across the country, the Government of Canada has announced that first-time homebuyers will be exempt from the Goods and Services Tax (GST) on new homes valued at up to $1 million Canadian dollars , and will receive a partial GST exemption on new homes valued at between $1 million and $1.5 million Canadian dollars .

On May 27, 2025, the Honourable François-Philippe Champagne, Minister of Finance and National Revenue, submitted a legislative proposal to amend the Excise Tax Act to establish the First-Time Home Buyer GST Rebate (FTHB GST Rebate) . The rebate measure will allow first-time homebuyers to save up to $50,000 in GST on their home purchase. This move is expected to bring $3.9 billion in tax relief to Canadians over the five years starting in 2025-26.

FTHB GST Rebate

Eligibility

If you are a first home buyer, you may be eligible to claim the FTHB GST rebate if you:

• Buying a new home from a builder;

• Build or hire someone to build a new home on land you own or lease;

• Buy shares in a housing cooperative.

The FTHB GST rebate applies to similar property types and eligibility criteria as the existing GST/HST New Homes Rebate, but with certain modifications to ensure the rebate is targeted specifically to first-time homebuyers.

Definition of “First Time Home Buyer”:

People who apply for this tax refund usually need to meet the following conditions:

• At least 18 years old;

• Be a Canadian citizen or permanent resident;

• You must not have owned or co-owned with your spouse or common-law partner any home (whether in Canada or outside of Canada), or lived in a home owned by you or your spouse or partner, in the year of your application and in the four calendar years immediately preceding that.

  
  

GST refund amount

Combined with the existing GST/HST New Homes Rebate (where applicable), the FTHB GST Rebate will provide a 100% GST rebate on new homes valued at $1 million or less .

For new homes valued between $1 million and $1.5 million, the rebate amount decreases linearly on a sliding scale . For example, a new home valued at $1.25 million would receive a 50% GST rebate (up to $25,000).

New homes valued at $1.5 million or more will not be eligible for the rebate .

Applicable situations of different housing purchase methods

Buying a new home from a builder

If eligible, homebuyers can reclaim up to $50,000 of GST (or the federal portion of HST).

Eligibility requirements include:

• At least one of the buyers must be a first-time homebuyer;

• The house will serve as their primary residence;

• This person needs to be the first time occupant of the property .

Tax refund application conditions:

• The purchase agreement with the builder is signed between May 27, 2025 (inclusive) and 2031 ;

• Housing construction must start before 2031 and be substantially completed before 2036 .

  
  

Owner-Built Homes

First-time homebuyers who build their own home or hire someone else to build a home can apply for a refund of the GST or federal portion of the HST paid on the construction of the home , up to $50,000 .

Eligibility requirements also include:

• At least one of the home builders is a first-time home buyer;

• The house is their principal residence;

• This person must be the first time occupant of the property.

Applicable time:

• Housing construction starts between May 27, 2025 and 2031 ;

• The housing needs to be substantially completed by 2036.

  
  

Buying Co-op Housing Shares

First-time homebuyers who purchase shares in a housing cooperative can apply for a rebate of up to $50,000 if the cooperative paid GST or the federal portion of HST on the new home.

Eligibility Requirements:

• At least one of the purchasers is a first-time homebuyer;

• The purchase of the shares is for the purpose of residing in the cooperative housing unit;

• This is the first time person to occupy the unit.

Applicable time:

• The share purchase agreement with the cooperative is signed between May 27, 2025 and 2031 ;

• Cooperative housing construction must begin before 2031 and be basically completed before 2036 .

Note: If a co-op home qualifies for the 100% GST rebate on homes built for rental purposes , it cannot claim the first home buyer GST rebate.

Restrictions

To ensure the rebate is fairly available to genuine first-time homebuyers from the date of publication, the following restrictions will apply:

• An individual can only apply for a FTHB GST refund once in their lifetime ;

• An individual cannot claim the refund if their spouse or common-law partner has claimed it;

• If the buyer acquires the property through an assignment sale, they will not be eligible for the rebate if the original sale agreement was signed before May 27, 2025 .

• If the original agreement was signed before May 27, 2025, and a new agreement is subsequently cancelled and signed (or a similar result is achieved through changes), the new agreement may not be eligible for a tax refund .