In a bold move to make homeownership more accessible for young Canadians and encourage new housing development, the federal government has introduced a new First-Time Home Buyers’ GST Rebate (FTHB GST Rebate). This initiative, unveiled on May 27, 2025 by the Honourable François-Philippe Champagne, Minister of Finance and National Revenue, aims to reduce the financial burden on first-time buyers and boost the construction of new homes across Canada.
What Is the FTHB GST Rebate?
Under the proposed changes to the Excise Tax Act, eligible first-time home buyers will benefit from a 100% GST rebate on new homes priced up to $1 million. Homes priced between $1 million and $1.5 million will see a phased-out rebate, up to a maximum of $50,000 in GST savings. No rebate will be available for homes priced at $1.5 million or more.
The measure is expected to deliver $3.9 billion in tax relief to Canadians over the next five years, starting in 2025-26.
Who Qualifies as a First-Time Home Buyer?
To be eligible for the FTHB GST Rebate, individuals must meet the following criteria:
Be at least 18 years old;
Be a Canadian citizen or permanent resident;
Not have owned or lived in a home owned by them or their spouse/common-law partner in the calendar year or any of the previous four calendar years.
In addition, only one individual on the purchase (or in the co-op arrangement) needs to meet the first-time buyer criteria, and that individual must intend to use the home as their primary residence and be the first to occupy it.
Eligible Housing Types
The FTHB GST Rebate applies to several housing arrangements:
1. New Homes Purchased from a Builder
Applies to homes bought directly from a builder, including on leased land.
Up to $50,000 in GST rebate available.
Purchase agreements must be signed on or after May 27, 2025 and before 2031.
Construction must begin before 2031 and be substantially completed before 2036.
2. Owner-Built Homes
Covers homes built by the buyer or hired contractors.
The buyer can recover up to $50,000 in GST/HST paid during construction.
Construction must begin on or after May 27, 2025 and be substantially completed before 2036.
3. Shares in a Co-operative Housing Corporation
Applies to purchases of shares in a housing co-op where GST was paid on new construction.
Up to $50,000 rebate on the buyer’s share.
Purchase agreements must be signed on or after May 27, 2025 and before 2031.
Co-op housing construction must start before 2031 and be completed before 2036.
Important Limitations to Know
While the rebate offers significant savings, it comes with a few key restrictions:
It can only be claimed once per lifetime.
You cannot claim the rebate if your spouse or common-law partner has already done so.
The rebate is not available for homes tied to purchase agreements signed before May 27, 2025, even if assigned to a new buyer after that date.
Canceling and re-signing agreements after May 27, 2025 will not reset eligibility.
A New Era for First-Time Buyers
The FTHB GST Rebate represents a significant shift in Canada’s housing affordability strategy. By effectively eliminating the federal portion of sales tax on many new homes for first-time buyers, this program could help thousands of young Canadians achieve the dream of homeownership while supporting new housing construction across the country.
Thinking about buying your first home? Start planning with us today and see if you qualify for the new FTHB GST Rebate. It could save you up to $50,000 on your purchase!
Some details provided by - https://www.canada.ca/en/department-finance/news/2025/05/gst-relief-for-first-time-home-buyers-on-new-homes-valued-up-to-15-million.html
