Exciting news for first-time home buyers in Ottawa and across Canada: The federal government has announced a proposed enhancement to the GST/HST new housing rebate, which could significantly lower the cost of buying a new home.

While full legislative details are still emerging, this update has the potential to bring meaningful relief to home buyers facing record housing prices—particularly in cities like Ottawa. Here’s what we know so far:

Key Features of the Proposed Rebate

• Full Rebate on Homes Under $1M: First-time buyers would receive a 100% rebate on the federal portion of HST for newly constructed homes priced at or below $1 million.
• Sliding Scale Rebate Between $1M–$1.5M: Partial rebates would apply to new homes priced between $1 million and $1.5 million, with the rebate phasing out entirely above $1.5 million.
• Substantial Savings: For eligible buyers, the rebate could represent savings of up to $50,000—money that could go toward closing costs, furnishings, or mortgage payments.

Who’s Eligible?

• You must be a first-time home buyer, typically defined as someone who hasn’t owned a home in the past four years.
• The home must be newly constructed and intended as your primary residence.
• You must be a Canadian citizen or permanent resident.

Timing and Next Steps

• While the rebate has been announced, it’s important to note that legislation has not yet officially come into force.
• Purchase agreements dated on or after May 27, 2025 are expected to fall under the proposed rebate terms, but more clarification is anticipated.

What This Means for Buyers (and Why It Matters)

This is not just an announcement—it’s a heads-up. If you’re shopping for a home or preparing to enter the market, this could impact your budget in a meaningful way. That said, don’t count on the rebate just yet. Until the rules are finalized and in force, buyers should:

• Double-check their agreements to ensure the rebate is properly accounted for;
• Verify eligibility before assuming savings;
• Speak with their real estate lawyer to understand how the rebate might apply to their specific transaction.

Considerations for Builders

Builders should be aware of the proposed rebate and its potential impact on sales and pricing strategies. Key considerations include:

• Eligibility of Buyers: Ensure that purchasers meet the first-time home buyer criteria to qualify for the rebate.
• Agreement Dates: Be mindful that only purchase agreements entered into on or after May 27, 2025, and before 2031, are expected to qualify.
• Construction Timeline: Construction must commence before 2031 and be substantially completed before 2036 to be eligible.
• Rebate Administration: Decide whether to credit the rebate amount to the buyer at closing or have the buyer apply directly to the Canada Revenue Agency (CRA).
• Documentation: Maintain thorough records to support the rebate claims, including proof of buyer eligibility and construction timelines.

Final Thoughts

We’ll be keeping a close eye on how this rebate is implemented and how builders choose to structure their agreements in response. A follow-up article will delve into legal considerations and practical tips once the rebate comes into force.

In the meantime, if you’re considering buying a new home and want to understand how this proposed rebate could affect you, don’t hesitate to reach out.

Mike D’Aloisio