On May 27, 2025, the Government of Canada announced a new federal GST rebate designed to ease the path to homeownership for first-time buyers. With housing affordability top of mind for many Canadians, this rebate could offer meaningful financial relief, particularly for those purchasing newly constructed homes.

Here’s what you need to know.

A New Incentive for First-Time Buyers

The First-Time Home Buyers’ GST Rebate allows eligible Canadians to recover up to $50,000 in Goods and Services Tax (GST), or the federal portion of the Harmonized Sales Tax (HST), on the purchase of a qualifying new home. This includes:

• New homes purchased from builders
• Owner-built homes
• Shares in cooperative housing corporations

The First-Time Home Buyers 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 first-time home buyers.

The rebate is available for agreements signed on or after May 27, 2025, and applies to homes where construction begins before 2031 and is substantially completed before 2036.

This federal initiative is expected to deliver $3.9 billion in tax relief over five years, helping more first-time buyers enter the market with greater financial flexibility.

 

How Much Could You Save?

• Homes priced at $1 million or less: Qualify for the full GST rebate of up to $50,000.
• Homes priced between $1 million and $1.5 million: The rebate is gradually reduced. For example, a $1.25 million home would be eligible for a $25,000 rebate.
• Homes priced over $1.5 million: Do not qualify for the rebate.

It’s worth noting that this represents a significant increase in the rebate threshold. Previously, homes priced above $450,000 were not eligible for any federal rebate, effectively excluding many buyers in competitive urban markets.

 

Are You Eligible?

To qualify, buyers must:

• Be at least 18 years old
• Be a Canadian citizen or permanent resident
• Has not lived in a home, in Canada or abroad, that was owned by the individual or their spouse/common-law partner during the current calendar year or at any time in the previous four years
• Intend to use the home as a primary residence

The rebate is not available to corporations or trusts and is only valid for personal-use residential properties.

 

Why This Matters

In markets where the price of a newly built home often exceeds $450,000, this policy change could improve access to homeownership for a broader range of Canadians. It’s particularly relevant in high-demand urban areas, where first-time buyers have faced steep barriers to entry due to rising prices and limited inventory.

Buying your first home is a major milestone that comes with important decisions. From understanding your eligibility to identifying homes that qualify for the rebate, having expert guidance can make all the difference. Whether you’re beginning your homeownership journey or simply exploring your options, we’re here to help you move forward with confidence.

Connect with a local Sotheby’s International Realty Canada advisor today to learn more about how this new rebate could work for you.

 

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Disclaimer: The information provided in this article is deemed accurate at the time of publication. Government policies and programs are subject to change. For the most current information regarding the First-Time Home Buyers’ GST Rebate, please consult the official Government of Canada website.