First-time homebuyers may be in for an early treat this year, because earlier this month, the federal government tabled a proposal for a new rebate on the GST for newly-built homes that could save eligible buyers up to $50,000 on the price of a new home.
What’s being proposed?
Called the First-Time Homebuyers GST Rebate (or FTHB GST Rebate), the goal of the program is to help more first-time homebuyers be able to afford to enter the housing market by effectively eliminating the federal GST on newly-built homes priced below $1 million, and reducing the GST for properties that are priced between $1 million to $1.5 million.
The proposal hasn’t yet been passed by Parliament or received the “royal assent” it needs to become law. But if it is passed (which seems likely), first-time homebuyers could qualify for a net savings of up to 5 per cent off the cost of a newly constructed apartment, condo, townhouse, or single-family home. For a million-dollar home, that would translate into a savings of around $50,000.
How will it work?
The program is similar to the existing GST/HST new housing rebate, but with two major differences. First, the GST/HST new housing rebate is available for any buyers of a new property, whereas the FTHB GST Rebate is exclusively for first-time buyers.
Second, while the GST/HST new housing rebate only applies to homes with a maximum market value of $450,000, the FTHB GST Rebate will be available in full on properties priced at up to $1 million, and in part on homes priced even higher, at up to $1.5 million. This is especially good news for first-time buyers in Greater Vancouver, where the average price of a home is currently sitting at just over $1.2 million.
As with the GST/HST new housing rebate, buyers who take advantage of the FTHB GST Rebate will be able to either claim the rebate directly, or apply to obtain it through their builder. The program is expected to last for at least the next five years, though it could be extended by the federal government after the initial trial period is up.
Who’s eligible to apply?
The rebate would apply to first-time homebuyers anywhere in Canada who either buy a new home from a builder, buy shares in a co-operative housing program, or who build (or hire someone to build) a new home on land they already own or lease.
For the purposes of the program, “first-time homebuyers” are defined as Canadian citizens or permanent residents who are at least 18 years of age and who have either never owned a residential property before, or who haven’t lived in a residential property inside or outside of Canada that they or their spouse or common-law partner owned in the last five calendar years.
According to some estimates, by those parameters, the rebate could end up saving more than 70,000 first-time buyer households an estimated $3.9 billion over the next five years.
What happens next?
The rebate proposal is expected to pass sometime later this summer. But regardless of when it’s made official, the rebate will be effective for any sales agreements dating back to May 27, 2025 or later.
So if you recently entered into a sales agreement with a builder for a new home, or are just thinking about buying your first property, start the planning process now by doing your research, reaching out to your REALTOR®—or by contacting us to find out if you may be eligible to apply!