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Ontario is set to temporarily eliminate its part of the Harmonized Sales Tax (HST) on qualifying new homes as part of its upcoming 2026 Budget. The proposal would remove the full 13% HST for eligible purchases of new homes priced up to $1M, with reduced relief extending to homes valued as high as $1.85M. Structured as a one-year measure running from April 1, 2026, to March 31, 2027, the initiative aims to lower upfront ownership costs while stimulating new housing construction across the province.
The proposal is being advanced in partnership with the federal government, which has already announced dropping its portion of the HST. Together, the two levels of government are projecting nearly $2.2B in combined housing-related tax relief.
Under the proposed framework, the full 13% HST would be eliminated for new homes priced at or below $1M, translating to a maximum benefit of $130,000. That maximum would be preserved for homes valued up to $1.5M, before tapering on a sliding scale between $1.5M and $1.85M, where the rebate declines to $24,000. Homes priced above $1.85M would continue to qualify for the existing provincial rebate at that level.
The policy is expected to accelerate construction timelines, with provincial estimates pointing to as many as 8,000 additional housing starts over the next year. In turn, the increase in activity is projected to support up to 21,000 jobs and contribute approximately $2.7B to Ontario’s GDP.
The expanded rebate builds on earlier steps, including Ontario’s previously announced removal of the provincial portion of HST for first-time buyers on homes up to $1M. As part of the update, the province is also aligning implementation timelines with the federal program, applying to agreements of purchase and sale signed on or after March 20, 2025, through to the end of 2030. Existing eligibility criteria under the New Housing Rebate and New Residential Rental Property Rebate would remain in place.
The Building Industry and Land Development Association (BILD) and the Ontario Home Builders’ Association (OHBA) pointed to months of coordinated engagement with provincial and federal officials, supported by economic analysis examining the impacts of tax relief on housing supply. With market activity having slowed since 2022, the organizations have argued that reducing upfront costs is critical to restoring demand and maintaining construction pipelines, positioning the expanded HST rebate as a step toward stabilizing the sector and supporting employment.
The expanded relief would apply to agreements of purchase and sale signed on or after April 1, 2026, with earlier transactions remaining subject to existing tax rules. As with current rebate programs, the benefit may be assigned to the builder at the point of sale, allowing it to be reflected in the purchase price rather than claimed post-closing.
Alongside the temporary tax changes, the province has pointed to its removal of the provincial portion of HST on qualifying purpose-built rental housing, as well as major infrastructure funding commitments through the $4B Municipal Housing Infrastructure Program and the $1.2B Building Faster Fund.
Concurrently, cities such as Mississauga are advancing measures like reductions and eliminations of development charges to support new construction. “As a city, we welcome this important step to make homes more affordable. The provincial government’s HST cut will help turn Mississaugans’ homeownership dreams into reality,” said Mississauga Mayor Carolyn Parrish.
“Today’s announcement reflects what we can accomplish when all levels of government come together with a shared commitment to getting more homes built, faster. Mississauga is growing, and projects like this show the real progress happening on the ground,” said Nina Tangri, Associate Minister of Small Business.
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UrbanToronto's research and data service, UTPro, provides comprehensive data on construction projects in the Greater Golden Horseshoe—from proposal through to completion. Other services include Instant Reports, downloadable snapshots based on location, and a daily subscription newsletter, New Development Insider, that tracks projects from initial application.
