First-Time Home Buyers' GST Rebate on New Homes in Canada: What It Covers

The regular federal new housing rebate is nil at $450,000 or more, and the first-time buyer rebate is the only federal relief for a new home above that price. The first-time home buyers' GST/HST rebate was introduced to cover that gap for qualifying buyers.

This article explains what it covers, the price thresholds, who counts as a first-time buyer, the timing rules, and how it fits with the regular rebate.

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

What the rebate covers

For a new home with total consideration of $1,000,000 or less, the rebate under section 254(2.1) is the lesser of $50,000 and the tax paid, minus any regular section 254(2) rebate.

For consideration between $1,000,000 and $1,500,000, the rebate is C × [($1,500,000 − D) ÷ $500,000]. C is the lesser of $50,000 and tax paid, and D is the total consideration. At $1,500,000 or more it is nil. For example, a $1,250,000 home gets half, up to $25,000.

How it works with the regular rebate

The regular rebate is 36% of the tax paid, up to $6,300, and it phases out between $350,000 and $450,000. On a $1,000,000 home the regular rebate is nil, so only the first-time buyer rebate can apply, and it equals the lesser of $50,000 and the tax paid.

The two can be combined. The first-time buyer rebate can be claimed in addition to the regular rebate as a top-up, and a buyer who fails the first-time buyer test may still qualify for the regular rebate.

Who counts as a first-time buyer

The buyer must be at least 18, a Canadian citizen or permanent resident, and must not have lived in a home they owned, alone or jointly, as a primary residence in the current calendar year or the previous four years. Neither the buyer nor their spouse or common-law partner can have received a first-time buyer rebate before. The buyer must also be the first occupant and be buying as a primary residence.

A spouse or common-law partner's prior home ownership in the lookback period, and any earlier first-time buyer rebate they received, count against the buyer. A person can claim the rebate only once in their lifetime.

Timing rules and special cases

• 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.
• 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. The agreement-date rule above still applies too, so the dates on an assigned agreement are worth confirming with a lawyer.
• For mobile, modular and floating homes, the rebate may cover only part of the GST/HST paid.
• For houses on leased land or co-op shares, CRA tests the price differently, with $472,500 for the base test and $1,575,000 for the first-time buyer test.
• Co-op shares are not eligible if the co-op housing qualifies for the 100% rebate for purpose-built rental housing.

If you build the home yourself, a similar top-up exists. Construction or renovation must begin after March 19, 2025 and before 2031 and be substantially complete before 2036.

What to do next

• Find the date on your agreement of purchase and sale, and check it against the timing rules.
• If your agreement is an assignment, have a lawyer review whether the original agreement date affects your eligibility.
• Confirm your own and your spouse's or common-law partner's home ownership and rebate history.
• Ask the builder how the rebate will be handled on closing, and keep your statement of adjustments.
• Check provincial top-ups separately, since they vary by province.

If your price is close to a threshold, ask a lawyer or accountant how total consideration will be measured for your purchase.

Frequently asked questions