GST Rebate on New Homes: How It Works

More affordability relief for first-time buyers.

The federal government’s 100% GST rebate, introduced in May 2025, gives eligible first-time buyers of newly built homes another break. Here’s what it covers, how it compares to the FTHB's Tax Credit, and why it matters for new-home affordability.

Nov 03, 2025

Firsts come first — for buyers and builds.

Ottawa’s recent GST rebate helps put first-time buyers at the front of the line for a fresh new home, and (ideally) gives new-home construction a nudge to match.

This rebate helps qualifying first-time buyers of new builds — from detached houses to condos — save up to a full 5% off the purchase price, depending on the details:

Full GST rebate on homes up to $1M purchase price
Scaled down rebate between $1M – $1.5M
No rebate above $1.5M

For a $1M new build price tag, the rebate could translate to $50K in first-time savings, providing significant relief from the upfront costs of becoming a homeowner or helping to increase your down payment.

Key points:

100% GST rebate for first-time buyers of new homes up to $1M
Partial GST rebate between $1M and $1.5M
Applies only to new-build purchases by first-time home buyers, not home resales
Separate from the FTHB Tax Credit
Applies to eligible purchases made on or after May 27, 2025

Why this GST rebate matters.

For years, the older GST New Housing Rebate capped out at a $450K home price, a limit far below today’s home price averages, especially in larger city centres.

The May 2025 government update modernized those thresholds for targeted relief where it’s needed most: helping first-time buyers afford new homes.

How the rebate works

Typically, the GST rebate doesn’t reduce the new home’s price upfront, but reduces the final amount owed.

Two common ways it’s applied:

Builder-applied rebate (most common). For new homes bought directly from a builder, the rebate is usually applied at closing. You pay the net amount (minus rebate), and the builder claims it from the government afterward.

Buyer-claimed rebate. If you build your own home (or hire a contractor to do it), you pay the GST in full and then submit a rebate claim to the Canada Revenue Agency (CRA) once your home is substantially complete.

Either way, the rebate process eventually ensures your savings.

Who qualifies for this GST rebate today?

To claim the rebate as a first-time home buyer, you (or your spouse or common law partner) must:

Be 18 or older (depending on provincial legal adult status)
Be a Canadian citizen or permanent resident
Have not owned a home (in Canada or abroad) in the year of purchase or the four years prior
Intend to live in the home as your principal residence
Have not received a prior GST rebate on a new build

To be eligible for this (new) rebate, home purchase agreements must be signed on or after May 27, 2025.

Qualifying homes, and what doesn’t count.

In addition to qualifying as a first-time home buyer, you’re eligible if you:

Buy a newly built home directly from a builder or developer
Build or hire someone to build your own home
Purchase shares in a new housing co-op

Resale homes don’t qualify — they’re exempt from GST, so there’s no tax to rebate.

How this GST Rebate compares to the First-Time Home Buyers’ Tax Credit

Don't mix the first-timer GST rebate up with the first-time Home Buyer's Tax Credit (HBTC), which is a smaller, after-purchase tax break you claim on your annual tax return that can help you recoup some of the closing costs.

Depending on your eligibility, you can claim both — the GST rebate upfront and the tax credit at tax time.

Program	Type	Applies to	Max Benefit
GST Rebate	Rebate on purchase	New homes only (first-timers)	Up to 5%, depending on home price (≈ $50K)
FTHB Tax Credit	Non-refundable tax credit	New or resale homes (first-timers)	$1,500 in tax savings

Could more homebuyers qualify for a GST rebate in the future?

Housing experts and builder groups, including the Canadian Home Builders’ Association, are encouraging Ottawa to broaden the rebate beyond first-time buyers and increase the full rebate limit in expensive markets, like Greater Toronto and Greater Vancouver, to $1.5M (scaling down through to $2.0M).

For now, however, this rebate program is focused on helping new entrants into the real estate market — perhaps this policy will evolve as affordability challenges persist.

Why does this GST rebate matter for home affordability?

This rebate can help close the affordability gap for first-time buyers, making newly built homes more accessible — especially in new or growing communities where prices might outpace those of older housing.

By reducing the upfront cost, it encourages more buyers to consider new builds, which in turn supports local construction and helps boost housing supply.

For builders, a demand spark in this sector can help move inventory, restore market confidence, and keep projects viable in areas where supply growth has been slow to start.

Pair your rebate with a better rate.

From rebates to better rates and mortgage options, our expert brokers know how to line up every savings opportunity to help first-time buyers get their foot in the real estate door.

Get a rough idea of your home affordability with our calculator below.

Then, apply or talk to us (in your preferred language) today — we’ll walk you through what you can qualify for, and help you find the lowest rate and flexible mortgage options to turn your dream home into reality.