You Can Now Save Up to $130,000 on a New Home in Ontario: First-Time Home Buyers HST Rebate
- Elkhanagry Accounting
- Dec 15
- 4 min read
Table of Contents
Housing Affordability and Government Policy Initiatives
Why the Old HST Rules Were Largely Ineffective
What the New HST Rules Are — and How Much You Can Save
Who Qualifies for the First-Time Home Buyer HST Rebate
Legislative References
Contact Us
Housing Affordability and Government Policy Initiatives
Housing affordability has become a defining economic issue in Canada, particularly for first-time home buyers in Ontario. Elevated interest rates, persistent supply shortages, and rising construction costs have made entry into the housing market increasingly difficult.
In response, the federal government—under the current Liberal leadership—has focused on a supply-first affordability strategy, pairing targeted tax relief with measures designed to increase housing availability. Key initiatives include:
Expanded CMHC financing programs, including higher loan limits, longer amortization periods, and reduced equity requirements for purpose-built rental housing. These changes are intended to unlock private capital and accelerate new housing supply.
Insured mortgage reforms aimed at supporting new construction and affordability, particularly for multi-unit and rental developments.
Incentives to speed up housing development, including federal pressure on municipalities to reduce approval delays and increase density near transit corridors.
Targeted tax relief for end buyers, including the enhanced First-Time Home Buyer GST/HST Rebate, which directly reduces the upfront cost of purchasing newly built homes.
The enhanced HST rebate is best understood as part of this broader policy framework: rather than stimulating demand alone, it complements measures intended to expand supply while easing the tax burden on first-time purchasers.
Why the Old HST Rules Were Largely Ineffective
Under the previous framework, the federal GST/HST New Housing Rebate was technically available to first-time buyers—but practically inaccessible.
The rebate:
Began phasing out at $350,000
Was fully eliminated at $450,000
Was capped at $6,300
Given Ontario home prices, especially in urban markets, this meant the rebate was effectively useless for most buyers. In many cases, first-time purchasers paid the full federal GST despite qualifying in principle.
While Ontario’s provincial rebate provided some relief, the overall structure failed to meaningfully reduce the upfront tax burden for new home buyers.
What the New HST Rules Are & How Much You Can Save
Under the new proposed federal rules:
100% of the 5% federal GST may be rebated
Applies to newly built homes priced up to $1,000,000
A gradual phase-out applies for homes priced between $1,000,000 and $1,500,000
Homes priced above $1,500,000 are not eligible
Maximum federal savings can reach $50,000
This represents a substantial increase from the previous $6,300 limit and significantly improves affordability for first-time buyers.
Ontario’s Expanded HST Relief
Ontario has announced complementary relief that would:
Rebate the entire 8% provincial portion of HST
Apply to newly built homes priced up to $1,000,000
When combined with the federal rebate, eligible first-time buyers may effectively eliminate the full 13% HST on a qualifying new home purchase in Ontario.
Who Qualifies for the First-Time Home Buyer HST Rebate
Eligibility is technical, but generally requires that:
You are at least 18 years of age
You are a Canadian citizen or permanent resident of Canada
The buyer is a first-time home buyer, meaning no ownership interest in a home in the prior four calendar years
The home is newly constructed or substantially renovated
The property is acquired as the buyer’s primary residence
The purchaser is an individual, not a corporation or trust
What Is a “Substantially Renovated” Home?
A home is considered substantially renovated if:
90% or more of the interior of the building has been removed or replaced
Cosmetic upgrades alone (floors, kitchens, bathrooms) are not sufficient
Structural and systems work (walls, wiring, plumbing) is typically required
This definition is strictly applied by CRA.
Eligibility should always be reviewed before signing a purchase agreement, as errors can permanently disqualify a rebate.
CRA References:
Initial Announcement: First-time home buyers’ (FTHB) GST/HST rebate
Form GST190, GST/HST New Housing Rebate Application for Houses Purchased from a Builder
Form RC7190-WS, GST190 Calculation Worksheet
Form GST191, GST/HST New Housing Rebate Application for Owner-Built Homes
Form GST191-WS, Construction Summary Worksheet
Guide RC4028, GST/HST New Housing Rebate
Ontario:
Contact Us!
Navigating the new HST rebates for first-time home buyers can be complex, especially when builder contracts, timing rules, and eligibility requirements are involved. A small misstep can mean losing tens of thousands of dollars in rebates.
If you’re purchasing a newly built home—or planning to—Elkhanagry Accounting can help you:
Confirm eligibility for the new federal and Ontario HST rebates
Coordinate HST planning with FHSAs, RRSPs, and other tax rebates.
Quantify expected HST savings under different purchase prices
📩 Contact us today to ensure you’re maximizing your savings and buying with confidence.
Disclaimer
This article provides general information that is current as of the posting date and is not updated, which means it may become outdated. The content is not intended to provide accounting, tax, or financial advice and should not be relied upon as such. Tax and financial situations are unique to each individual and may differ from the examples discussed in this article. For personalized advice, please consult a qualified tax professional.
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