The federal government has introduced a new GST/HST rebate aimed at improving housing affordability for purchasers of newly constructed homes. The legislation, which received Royal Assent in March 2026, can provide up to $50,000 in tax relief.

More recently, Ontario announced a temporary expansion of the rebate to all new home buyers, not just first-time purchasers, for agreements entered into between April 1, 2026 and March 31, 2027. While details are still being implemented, the change significantly broadens who may benefit, at least in the short term.

This measure is expected to apply to agreements of purchase and sale entered into between April 1, 2026 and March 31, 2027. As a result, buyers who would not otherwise qualify as first-time home buyers may still be eligible for HST relief, provided their agreement falls within that window.

Below is a practical overview of how the rebate works and what buyers should consider.

How the Rebate Works

The rebate allows qualifying purchasers to recover the HST paid on a newly constructed or substantially renovated home.

• Up to $1,000,000 – Full rebate of the federal GST (up to $130,000) 
• $1,000,000 to $1,500,000 –  The full rebate on the first $1,000,000 is still provided.
• $1,500,000 – $1850,000 – The rebate is phased out on a sliding scale to $24,000.

Examples

A buyer purchases a new home for $900,000. The HST would normally be $117,000. With the rebate, that amount may be fully recovered.

A buyer purchases a new home for $1,400,000. The HST would normally be $182,000. Under the temporary program, the buyer still qualifies for the maximum rebate of $130,000

A buyer purchased a home for $1,675,000. A sliding scale is used to determine the reduced rebate. In this case, the buyer would receive 50% of the rebate, or $77,000.

Who Qualifies

Under the federal program, the rebate is generally available to first-time home buyers. However, the recent Ontario announcement may temporarily extend eligibility to all new home buyers for a one-year period, regardless of first-time buyer status. Buyers should confirm whether their transaction falls within the applicable timing and program requirements.

To qualify for the temporary program, the agreement of purchase and sale must be entered into between April 1, 2026 and March 31, 2027. For homes intended as a primary residence, construction must begin on or before December 31, 2028 and be substantially completed by December 31, 2031. For rental properties, construction must be completed by December 31, 2029. The province has indicated that additional eligibility criteria will be released.

What if you already have a signed purchase agreement?

If you have an existing agreement to purchase a new build home, you may be eligible for the Federal Government’s rebate program for first-time home buyers.  CLICK HERE for details on the rebate and how it is received. 

How the Rebate Is Received

There are two ways the rebate may be handled:

Credited at closing

The builder reduces the HST payable and claims the rebate from the CRA. This is the simplest outcome for buyers.

Claimed after closing

If the builder does not credit the rebate, the buyer must pay the HST at closing and apply directly to the CRA afterward.

Existing Agreements: A Key Issue

For buyers who signed agreements before the rebate was finalized, the treatment of the rebate is less straightforward.

Many builders are taking the position that these buyers must apply directly to the CRA after closing, rather than receiving a credit at closing.

Example

A buyer signs a pre-construction agreement in early 2025 for a home priced at $950,000. The agreement requires GST to be paid on closing.

Even if the buyer qualifies for the rebate, they may need to:

• Pay the GST at closing, and 
• Apply to the CRA afterward to recover it 

This can create a temporary cash flow impact at closing, even though the rebate is ultimately available.

Why the Agreement Matters

The treatment of the rebate often depends on the wording of the purchase agreement.

Builder agreements frequently:

• Assume the buyer qualifies for existing rebates 
• Require the buyer to assign rebate rights to the builder 
• Do not address newly introduced rebate programs 

As a result, whether the rebate is credited at closing or claimed later will often depend on the specific contract terms.

Practical Tips for Buyers

• Confirm how the rebate will be applied (at closing or post-closing) 
• Review the GST/HST clause in your agreement carefully 
• Plan for closing costs, especially if the rebate will be claimed afterward 
• Keep documentation to support eligibility 

Final Thoughts

The new GST/HST rebate can significantly reduce the cost of purchasing a newly constructed home. The recent expansion to all buyers, even if temporary, further increases its potential impact.

However, the benefit is not automatic. How and when the rebate is received will depend on the timing of the agreement, the wording of the contract, and how builders implement the new rules.

Buyers should review their agreements carefully and confirm how any available rebate will be handled as part of their transaction.

Michael Abrams
Certified as a specialist in Real Estate by the Law Society of Ontario