Federal GST Relief for First-Time Buyers of New Homes in Canada

If you are buying a new home from a builder, the federal GST (or the federal part of HST) can be a large cost. A newer federal rebate is aimed at first-time buyers and reaches much higher prices than the older new housing rebate.

This article explains in plain terms how that relief works, who qualifies, how the price limits operate and how your contract date can affect it. It is general information, and your own contract and circumstances decide the result.

This article covers Canadian federal tax law, which applies in every province.

What the relief is

The first-time home buyers' GST/HST rebate is found in section 254(2.1) of the Excise Tax Act. For a new home with total consideration of $1,000,000 or less, the rebate is the lesser of $50,000 and the tax paid, minus any rebate you get under the regular new housing rebate in section 254(2).

It works as a top-up. You can claim it in addition to the regular new housing rebate, and a buyer who fails the first-time buyer test may still qualify for the regular rebate. The regular rebate is nil at $450,000 or more, so the first-time buyer rebate is the only federal relief for a home priced above that level, if you qualify.

How the price limits work

For a house bought from a builder, the thresholds are tested against total consideration, which is the purchase price excluding GST/HST and certain other amounts.

In that formula, C is the lesser of $50,000 and the tax paid, and D is the total consideration. As an example, a $1,250,000 home gets half, up to $25,000. Different thresholds apply to a house on leased land or a co-op share: $472,500 for the base test and $1,575,000 for the first-time buyer test.

Who qualifies

• You are at least 18, and a Canadian citizen or permanent resident.
• You have not lived in a home you owned, alone or jointly, as your primary residence in the current calendar year or the previous four years.
• Neither you nor your spouse or common-law partner has received a first-time buyer rebate before.
• You are the first occupant and are buying the home as your primary residence.

Your spouse or common-law partner counts against you: their home ownership in the lookback period and any earlier rebate they received are taken into account. A person can claim this rebate only once in their lifetime.

Which contracts it applies to

The agreement of purchase and sale must be entered into after March 19, 2025 and before 2031. Construction must begin before 2031 and be substantially completed before 2036, and ownership must transfer before 2036. CRA lists March 20, 2025 as the earliest agreement date.

Assignments need extra care. A first-time buyer who takes over another person's builder agreement signed before the cut-off date in the Finance announcement, May 27, 2025, cannot claim the rebate, and cancelling and replacing an earlier agreement may disallow it. With an assignment there may be two builders, and you may pay tax to both the original builder and the assignor. Because the dates differ between sources, a lawyer or accountant can confirm which dates apply to your agreement. Mobile, modular and floating homes may get the rebate for only part of the tax paid. A co-op share is not eligible if the co-op housing qualifies for the 100% GST rebate for purpose-built rental housing.

What to do next

• Find the date on your agreement of purchase and sale and any assignment.
• Check your own and your spouse's or common-law partner's ownership history for the last four years and the current year.
• Ask the builder how it will handle the rebates on closing. For the regular new housing rebate, the builder may pay it to you or credit it against the price, and if it does you do not send that application.
• The regular new housing rebate is generally claimed within two years of the date ownership was transferred, on Form GST190, if the builder does not pay or credit it. How and when to claim the first-time buyer portion depends on your situation, so confirm it with a lawyer or accountant before closing.
• If you claim a builder-purchase rebate yourself, send a copy of your statement of adjustments with Form GST190, and keep your supporting records for six years.

If your contract is an assignment, or your history is not simple, a lawyer or accountant can confirm whether you qualify before closing.

Frequently asked questions