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The federal government’s First-Time Home Buyers’ GST rebate has now come into force following Royal Assent of Bill C-4, enacting a tax measure aimed at easing the cost of purchasing newly built homes. The legislation eliminates the Goods and Services Tax on new homes priced up to $1M for eligible first-time buyers and reduces the tax on homes priced between $1M and $1.5M. The measure is intended to help more Canadians enter the housing market and to encourage additional housing construction.
The tax change follows nearly a year of anticipation after the federal government first signalled its intention to introduce GST relief for first-time buyers of newly built homes. During that period, the proposal moved through multiple legislative stages, with delays drawing criticism from housing industry groups who argued that uncertainty was discouraging potential buyers from committing to purchases. The Canadian Home Builders’ Association (CHBA) repeatedly called on the government to advance the legislation, contending that many would-be purchasers had remained on the sidelines while waiting for the rebate to be enacted.
Under the measure, qualifying first-time buyers purchasing newly built homes would receive a full rebate of the federal GST on homes priced up to $1M, with a partial rebate applying to homes priced between $1M and $1.5M. The program is intended to lower the cost of entering the new-home market, with potential savings of up to $50,000. Federal officials have framed the initiative as a way to help younger households and families access home ownership while supporting the construction of additional housing.
Eligibility is tied to the timing of the purchase agreement, applying to homes where the agreement of purchase and sale was signed between March 20, 2025 and before 2031. Buyers who took possession of their homes before Royal Assent will need to apply directly to the Canada Revenue Agency (CRA) for the rebate, while builders will soon be able to apply the credit at the time of sale once the required forms are released. According to the CHBA, the CRA expects the documentation to be available within days and will also host a webinar to brief builders on the updated process.
Throughout the legislative process, the CHBA continued pressing federal officials to move the bill forward, arguing that clarity on the rebate would help re-engage buyers and support new housing construction. At the same time, the association has urged the government to broaden the policy beyond first-time purchasers, proposing that GST relief apply to all buyers of newly built homes. Industry groups contend that including move-up and downsizing households would stimulate additional development activity and free up entry-level housing in the resale market.
The association has also suggested expanding eligibility to include renovations that add new housing units, pointing to examples such as accessory dwelling units and secondary suites. Including such projects within the GST relief framework, industry representatives argue, could help stimulate activity in the renovation sector and support the creation of additional housing options.
With the legislation now in force, the housing industry expects the rebate to begin influencing purchasing decisions that had been deferred while buyers awaited clarity on the tax change.
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