GST Exemption for First-Time Homebuyers Announced by Federal Government

By Trevor Hargreaves, BCREA Senior VP, Government Relations,
Marketing & Communications

A GST exemption for first-time homebuyers (FTHBs) was a popular policy point ahead of the federal election, and it’s now been actioned by Prime Minister Mark Carney’s government. Starting in 2025-2026, FTHBs are entitled to GST relief on new homes up to $1.5 million. This is intended to “lower the upfront cost of buying” for FTHBs while simultaneously reducing the tax burden of the purchase. This savings of up to $50,000 is quite significant.

Some specifics:

A first-time homebuyer may be eligible for the FTHB GST Rebate if: 

• they buy a new home from a builder; 

• they build, or hire someone else to build, a home on land they own or lease; or 

• they buy shares of a co-operative housing corporation. 

The FTHB GST Rebate will apply to the same types of housing and apply similar eligibility criteria and conditions as the existing GST / HST New Housing Rebate, with certain modifications to ensure that the rebate is targeted at FTHBs. 

To be considered a “first-time homebuyer” for the purposes of the FTHB GST Rebate, an individual would generally need to meet the following conditions: 

• be at least 18 years of age; 

• be either a Canadian citizen or a permanent resident of Canada; and 

• 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. 

Together with the existing GST / HST New Housing Rebate (where that rebate is applicable), the FTHB GST Rebate would provide a rebate of 100 per cent 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 per cent GST rebate (a rebate of up to $25,000). 

No FTHB GST Rebate will be available for new homes valued at or above $1.5 million. 

Read more on the qualifying specifics here.