Recent federal and provincial announcements have highlighted potential GST/HST savings of up to $130,000 for eligible purchasers of newly constructed homes in Ontario.

While these incentives represent significant financial relief, there is an important distinction: new housing GST/HST rebates are not entirely new.

Both the federal government and Ontario have offered new housing rebates for years. The recent changes expand these benefits considerably, increasing the amount of tax relief available and extending certain incentives beyond first-time homebuyers.

For anyone considering a newly built or pre-construction home, understanding what has changed and how rebates are actually administered is essential.

1. What Rebates Were Available Before?

In Ontario, newly constructed homes are generally subject to 13% Harmonized Sales Tax (HST), consisting of a 5% federal portion and an 8% provincial portion.

Historically, eligible purchasers could recover part of this tax through two longstanding programs.

Federal GST/HST New Housing Rebate

The original federal rebate provides 36% of the 5% GST on qualifying homes valued at $350,000 or less, to a maximum of $6,300. The rebate gradually decreases for properties valued between $350,000 and $450,000 and is unavailable at $450,000 or more.

Ontario New Housing Rebate

Ontario's existing program provides a rebate of 75% of the provincial portion of HST, up to a maximum of $24,000 for a typical qualifying purchase from a builder.

Unlike the original federal rebate, Ontario's longstanding rebate does not have a comparable maximum purchase-price threshold.

This means buyers purchasing newly constructed homes valued above $1 million could already qualify for the $24,000 provincial rebate, provided they met the applicable conditions.

Neither of these longstanding programs was restricted exclusively to first-time homebuyers.

2. What's Changed in 2026?

The federal and provincial governments have expanded the available relief through enhanced programs.

These amounts cannot simply be added together. The programs are coordinated to prevent buyers from receiving more relief than permitted on the same tax.

Federal first-time buyer rebate

The enhanced federal program provides eligible first-time buyers with relief from the full 5% GST on qualifying newly constructed homes valued at $1 million or less, up to $50,000.

The rebate gradually decreases for homes valued between $1 million and $1.5 million and is unavailable at $1.5 million or more.

It generally applies to qualifying Agreements of Purchase and Sale entered into on or after March 20, 2025, and before 2031, subject to other eligibility and construction requirements.

Ontario's enhanced rebates

Ontario has expanded its provincial rebate to provide up to $80,000 in relief from the 8% HST component.

Importantly, Ontario's temporary Enhanced New Housing Rebate is not limited to first-time homebuyers.

Eligible purchasers who enter into an Agreement of Purchase and Sale with a builder between April 1, 2026, and March 31, 2027, may qualify, provided they meet the program's other requirements.

Under the temporary Ontario program:

• Homes valued up to $1 million may qualify for relief from the full 8% provincial HST.

• Homes valued between $1 million and $1.5 million may qualify for a flat $80,000 provincial rebate.

• Homes above $1.5 million and below $1.85 million may qualify for a reduced rebate.

• At $1.85 million or more, the original Ontario rebate of up to $24,000 may still be available.

Ontario's New Home Affordability Payment may provide up to an additional $50,000 in relief equivalent to the federal portion of HST. This payment is coordinated with any federal rebate entitlement to prevent duplication.

As a result, certain qualifying purchasers, including existing homeowners, may benefit from up to $130,000 in combined tax relief.

3. How Much Can Buyers Actually Save?

Consider a newly constructed home priced at $1 million before HST.

Under the longstanding programs, an eligible purchaser of this property could generally receive a maximum Ontario rebate of $24,000, with no federal rebate available at that price.

Under the enhanced programs, a qualifying buyer may receive relief equivalent to the entire $130,000 in HST.

That represents up to $106,000 in additional relief compared with the previous rebate structure.

However, the maximum advertised rebate does not necessarily represent additional money paid directly to the purchaser.

The actual benefit depends on eligibility, the terms of the purchase agreement, and whether the builder has already incorporated the rebates into the purchase price.

4. How Do Buyers Receive GST/HST Rebates?

This is one of the most important and frequently misunderstood aspects of purchasing a newly constructed home.

In practice, rebates are generally administered in one of three ways.

1. The builder credits the rebate at closing

Many builders advertise HST-inclusive purchase prices that already account for applicable new housing rebates.

The Agreement of Purchase and Sale may require the purchaser to assign eligible rebate rights to the builder.

The rebate may appear as a credit on the Statement of Adjustments or may already be reflected in the agreed purchase price.

Where the builder credits the rebate, the builder generally submits the corresponding application.

2. The purchaser applies directly to the CRA

If the builder does not credit an eligible rebate, the purchaser may be able to apply directly through the Canada Revenue Agency.

For qualifying properties purchased from a builder, the applicable forms generally include:

• GST190 - GST/HST New Housing Rebate Application for Houses Purchased from a Builder.

• RC7190-ON - Ontario Rebate Schedule.

The CRA also facilitates the application process for Ontario's New Home Affordability Payment, which is administered by the Province of Ontario.

3. The builder credits part of the rebate

In certain circumstances, a builder may credit the longstanding rebate but not all the additional enhanced relief available to the purchaser.

The buyer may then be eligible to claim the remaining amount separately, subject to the applicable program rules and the rebates already claimed by the builder.

A buyer cannot claim the same rebate twice.

Before applying directly to the CRA, purchasers should review their Agreement of Purchase and Sale and Statement of Adjustments to confirm exactly which rebates have already been credited.

5. Who Qualifies for the Enhanced Rebates?

Eligibility varies depending on the program.

For the federal First-Time Home Buyers' GST/HST Rebate, purchasers must generally be at least 18 years old, be Canadian citizens or permanent residents, and satisfy the applicable first-time ownership test.

That test considers whether the buyer or their spouse or common-law partner lived in a home they owned during the relevant calendar year or the preceding four calendar years.

Ontario's temporary Enhanced New Housing Rebate does not impose the same first-time buyer requirement.

However, qualifying purchases generally must be for use as the purchaser's or their relation's primary residence and must satisfy specific agreement, construction, completion, and other eligibility conditions.

The date the Agreement of Purchase and Sale was signed is particularly important. Closing a property during the qualifying period does not automatically establish eligibility if the original agreement falls outside the program's permitted dates.

Purchasers acquiring newly constructed properties as investments should also be aware that separate New Residential Rental Property Rebate programs may apply, with different eligibility and application requirements.

6. What Buyers Should Review Before Signing

Beyond determining whether a purchaser qualifies, understanding how the rebates affect the transaction is equally important.

Before signing a pre-construction or new-home purchase agreement, buyers should confirm:

• HST-inclusive pricing: Does the advertised purchase price already incorporate government rebates?

• Builder credits: Which rebates will the builder apply at closing, and which must be claimed separately?

• Rebate assignments: Is the purchaser required to assign their rebate rights to the builder?

• Eligibility: Do the agreement date, purchase price, intended use, and construction timelines satisfy the applicable requirements?

• Closing obligations: Could the buyer be required to repay a rebate if the CRA subsequently determines that they are ineligible?

These considerations can materially affect the amount required to close and the true cost of purchasing a newly constructed home.

A qualified real estate lawyer should review the HST and rebate provisions before the purchase agreement becomes firm.

Final Thoughts

The enhanced GST/HST rebates represent a meaningful shift in the economics of purchasing newly constructed housing in Ontario.

However, the distinction between existing and enhanced programs is important.

The original rebates - up to $6,300 federally and $24,000 provincially—have been available for years. The recent measures expand the potential relief considerably, including benefits for certain purchasers who are not first-time homebuyers.

For eligible buyers, the combined savings can reach $130,000.

Ultimately, the most important question is not simply how much the government is offering, but how much relief you qualify for, whether it is already reflected in the builder's pricing, and how it will be administered at closing.

Understanding these details before committing to a purchase can make a significant difference in evaluating the true financial cost of a new home.

Considering a New Construction or Pre-Construction Property?

Purchasing a newly constructed home involves more than evaluating the advertised price. Builder incentives, market conditions, development considerations, and closing adjustments all influence the overall transaction.

If you're exploring new construction opportunities in the Greater Toronto Area, I'd be happy to help you evaluate your options and connect you with the appropriate legal and tax professionals to confirm your rebate eligibility.