HST on New Homes in Ontario and the New Housing Rebates

Buying a new home, or one that has been substantially renovated, is different from buying a resale home. HST can apply to the purchase, and that can add a very large amount to your closing costs. The same purchase may also open the door to rebates that bring much of that tax back.

This article explains how the first-time home buyers' rebates work in Ontario, who qualifies, and what to check in your agreement of purchase and sale. The rules are detailed, so use this as a guide for the questions to ask rather than a final answer.

Is HST included in the price of a new home?

There is no single answer. Some builders quote a price with HST included, and others quote a price plus HST. The wording of your agreement of purchase and sale decides which one you have, so read that clause closely before you sign.

Look for words such as "HST included" or "plus applicable taxes." Also look for whether the builder is keeping any rebate you may be entitled to, or whether you are assigning the rebate to the builder. Both are common points of confusion, and a lawyer can review them with you.

• Does the price include HST, or is HST added on top?
• Who claims the rebate, you or the builder, and how is it credited?
• Is the home new, or substantially renovated?
• What happens to the price if the tax or rebate rules change before closing?

The federal first-time home buyers' rebate

The federal first-time home buyers' (FTHB) rebate is worth up to $50,000. It is a full rebate of the GST, or the federal part of the HST, on a new or substantially renovated home valued up to $1 million.

The rebate is reduced for homes valued between $1 million and $1.5 million, and it is nil at $1.5 million or more. For example, a $1.25 million home gets $25,000.

Who qualifies for the federal rebate

You must be at least 18 and a Canadian citizen or permanent resident. You must not have lived in a home owned by you or your spouse or common-law partner in the calendar year or the previous four calendar years. Neither of you can have received the rebate before.

For a home bought from a builder, there are timing rules as well. The agreement must be signed on or after March 20, 2025 and before 2031, and the home must be substantially completed before 2036. If your agreement was signed earlier or your closing falls near these dates, ask a lawyer whether you fit.

Your spouse or common-law partner's housing history counts as well as your own. If your partner owned and lived in a home during the lookback period, that can affect your eligibility.

The Ontario first-time home buyers' rebate

Ontario's FTHB rebate gives back up to $80,000 of the provincial part of the HST on a first home bought, built or substantially renovated in Ontario. It follows the federal FTHB eligibility conditions. If you qualify federally, you will generally want to check the Ontario rebate too.

Some of these new housing rebates depend on federal regulations, and the rules have been changing. Confirm their current status before you rely on them in your budget. Your lawyer can check this when reviewing your agreement.

What to do before you sign

• Get the agreement reviewed before you sign, especially the price and tax wording.
• List every home you or your spouse or common-law partner have lived in and owned in the current and previous four calendar years.
• Confirm your citizenship or permanent resident status.
• Ask how and when the rebate will be applied: as a credit on closing, or paid later.
• Confirm the signing date and expected completion date fit the rebate rules.
• Ask about other first-time buyer help, such as the Ontario land transfer tax refund of up to $4,000, which has its own conditions.

If you are not a citizen or permanent resident, also ask about Ontario's Non-Resident Speculation Tax, which is 25% in addition to the general land transfer tax and applies to foreign nationals in many purchases. A lawyer or accountant can help you work out which of these apply to your purchase.

Frequently asked questions