Effective May 27, 2025: The Canadian government launches the Goods and Services Tax (GST) Rebate (Rebate) for first-time home buyers
First-time homebuyers are offered full relief from the Goods and Services Tax (GST) on new homes worth up to $1 million, with partial relief available for new homes worth between $1 million and $1.5 million. First-time Home Buyers GST Rebate (hereinafter referred to as "FTHB GST Rebate"). With this rebate, first-time homebuyers can save up to $50,000 on a new home.
1. Who is eligible to apply for FTHB GST rebate?
If you are a first-time home buyer, you may be eligible for the FTHB GST rebate if you meet the following criteria:
You purchase a new home from a builder; or
You build a house on land you own or lease, or hire someone else to build a house; or
You buy shares in a cooperative housing company.
2. The FTHB GST rebate will apply to the same types of housing as the existing GST/HST new home rebate, and similar eligibility criteria and conditions will apply, but there will be certain modifications to ensure that the rebate is targeted to first-time home buyers.
To be considered a "first-time home buyer" for the purposes of the FTHB GST rebate, an individual generally needs to meet the following criteria:
Be 18 years or older;
Be a Canadian citizen or permanent resident; and
Have not lived in Canada or outside Canada in a home owned by you or your spouse or common-law partner during the calendar year of the tax refund application or within the four calendar years preceding it.
At the same time, at least one home buyer needs to be a "first-time home buyer" and purchase the new home for their primary residence. The individual also needs to be the first person to occupy the house as a residence.
3. How to calculate tax?
Combined with the existing GST/HST New Home Rebate (where applicable), the FTHB GST Rebate will provide a 100% GST rebate on new homes worth up to $1 million.
The FTHB GST rebate will phase out in a linear phase-out for new homes valued between $1 million and $1.5 million. For example, a home valued at $1.25 million would be eligible for a 50% GST rebate (up to a maximum rebate of $25,000) under the linear phase-out rules.
The FTHB GST rebate will not be available for new homes valued at $1.5 million or more.
4. Time frame for tax refund application
FTHB GST rebate is generally applicable under the following circumstances:
Buying a new home from a builder: A home purchase agreement with a builder is entered into on or after May 27, 2025, and before 2031, and construction on the home begins before 2031 and is substantially complete by 2036.
Homeowner Build: Construction on a home begins on or after May 27, 2025 and before 2031, and is substantially complete by 2036.
Purchase of shares in a cooperative housing company: A share purchase agreement with a cooperative is entered into on or after May 27, 2025, and before 2031, and construction of the cooperative housing begins before 2031 and is substantially completed by 2036.
It is important to note that if the co-operative house qualifies for the 100% GST rebate for rental housing, the FTHB GST rebate on the co-op shares cannot be claimed.
5. Restrictions on tax refund
To ensure the rebate is available to first home buyers as intended after the publication date, a set of rules will limit the availability of the FTHB GST rebate in certain circumstances. These rules include:
An individual can only claim the FTHB GST refund once in a lifetime.
If an individual's spouse or common-law partner has previously claimed an FTHB GST refund, the individual may not apply again.
If, in a transfer sale, a first-time homebuyer assumes the rights and obligations of another person under a home purchase agreement with the builder, and the original agreement was entered into before 27 May 2025, the FTHB GST rebate will not be available.
If a purchase agreement for a new home was originally entered into before 27 May 2025 and is subsequently canceled and a new agreement is entered into (or the agreement is amended or varied to achieve that result), the FTHB GST refund on the new home sold under the new agreement may not be allowed (and will not be allowed under the amended or altered agreement).
Government related information: 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
Henry Wang May 28, 2025