Unlock Up to $50,000 in Savings: Canada’s New GST Rebate for First-Time Home Buyers in 2025.
Dreaming of owning your first home in Canada? Starting May 27, 2025, first-time home buyers can save up to $50,000 on new homes thanks to the new First-Time Home Buyers’ GST Rebate (FTHB GST Rebate). This game-changing initiative, announced by the Government of Canada, eliminates the Goods and Services Tax (GST) on new homes priced up to $1 million and offers partial rebates for homes between $1 million and $1.5 million. Whether you’re eyeing a sleek condo in Toronto, a cozy co-op in Vancouver, or building your own dream home in Edmonton, this rebate could make homeownership more affordable. Here’s everything you need to know about this exciting opportunity, how to qualify, and what it means for Canada’s housing market.
What Is the First-Time Home Buyers’ GST Rebate?
On May 27, 2025, Finance Minister François-Philippe Champagne tabled amendments to the Excise Tax Act, introducing the FTHB GST Rebate to ease the financial burden on first-time home buyers. This rebate targets new homes, including newly built houses, condos, co-operative housing corporation (co-op) shares, and owner-built homes, with a maximum savings of $50,000. The measure, expected to deliver $3.9 billion in tax relief over five years starting in 2025-26, aims to make homeownership more accessible and stimulate new housing construction across Canada.
Unlike the existing GST/HST New Housing Rebate, which offers up to $6,300 for homes under $350,000 (phasing out at $450,000), the FTHB GST Rebate significantly expands eligibility to homes valued up to $1.5 million, reflecting today’s soaring housing prices in cities like Vancouver and Toronto, where the average home price exceeds $1 million.
How Does the FTHB GST Rebate Work?
The rebate structure is straightforward but depends on the price of the home:
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Homes up to $1 million: First-time buyers pay no GST, saving up to $50,000. For example, on a $1 million home, the 5% GST ($50,000) is fully rebated.
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Homes between $1 million and $1.5 million: A partial rebate applies, gradually decreasing as the price approaches $1.5 million. For instance, a $1.25 million home might save you around $25,000, depending on the exact calculation.
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Homes over $1.5 million: No rebate is available, so buyers pay the full GST.
The rebate applies to:
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New or substantially renovated homes purchased from a builder.
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Shares in a co-operative housing corporation (co-op) where the co-op paid GST/HST on new housing.
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Owner-built homes where the buyer paid GST/HST on construction costs.
To claim the rebate, the home must be your primary residence, and you must be the first occupant. The purchase agreement must be signed on or after May 27, 2025, and construction must begin before 2031, with substantial completion by 2036.
Who Qualifies for the FTHB GST Rebate?
To be eligible, you must meet the following criteria:
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First-Time Buyer: You (and your spouse or common-law partner) must not have owned or lived in a home you owned in the current year or the previous four years.
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Primary Residence: The home must be your primary place of residence, not a secondary or investment property.
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One-Time Claim: You can only claim the rebate once, and you’re ineligible if your spouse or common-law partner has previously claimed it.
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Timing: The purchase agreement must be signed on or after May 27, 2025, and before 2031. For owner-built homes, construction must start within this period.
For co-op purchases, at least one buyer of the share must be a first-time home buyer intending to use the co-op unit as their primary residence. If you’re assuming an agreement via an assignment sale, the original agreement must also be signed on or after May 27, 2025.
Can You Combine Rebates?
Yes! The FTHB GST Rebate can be combined with the existing GST/HST New Housing Rebate, potentially increasing your savings. For example, in Ontario, where the HST is 13% (5% GST + 8% provincial portion), you could claim:
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Up to $50,000 from the FTHB GST Rebate for the federal GST portion.
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Up to $24,000 from the Ontario HST New Housing Rebate for the provincial portion, even for homes valued above $450,000.
In a scenario where you buy a $1 million home in Ontario:
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GST Portion: 5% of $1 million = $50,000 (fully rebated via FTHB GST Rebate).
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Provincial HST Portion: 8% of $400,000 = $32,000, with up to $24,000 rebated.
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Total Savings: Up to $74,000 when combining both rebates.
Other provinces, like Nova Scotia, offer a provincial rebate of up to $3,000 for first-time buyers, while Quebec provides up to $9,975 for homes under $200,000 (phasing out at $300,000). However, provinces like British Columbia and Saskatchewan don’t offer provincial rebates for new homes in most cases.
Why This Matters: Tackling Canada’s Housing Crisis
Canada’s housing market is no joke—average home prices hit $657,000 nationally in December 2023, with Vancouver and Toronto averaging around $1 million. For first-time buyers, especially young Canadians and newcomers, saving $50,000 is a lifeline in a market where affordability feels like a distant dream. The Canada Mortgage and Housing Corporation (CMHC) estimates a need for 5.8 million new homes by 2030 to restore affordability, but high interest rates and construction costs have slowed building.
Prime Minister Mark Carney, who announced the policy’s framework in March 2025, emphasized its dual purpose: lowering upfront costs for buyers and spurring construction to increase housing supply. “We’re delivering change to cut taxes, so Canadians keep more of their paycheques,” Carney said. The Canadian Home Builders’ Association (CHBA) praised the move but suggested raising the zero-GST threshold to $1.5 million to better support buyers in high-cost regions like Metro Vancouver and Greater Toronto.
However, not everyone’s convinced. Posts on X highlight skepticism, with some users noting that few first-time buyers purchase new homes due to their high costs. Economist Mike Moffatt pointed out a discrepancy in cost estimates, with the government projecting $3.9 billion over five years, while the Parliamentary Budget Officer (PBO) estimates $1.9 billion, suggesting fewer eligible buyers than anticipated. Critics like real estate expert John Pasalis argue the rebate won’t significantly boost affordability unless more affordable homes are built.
How to Apply for the FTHB GST Rebate
Ready to claim your savings? Here’s how:
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Confirm Eligibility: Ensure you meet the first-time buyer and primary residence criteria.
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Gather Documentation: Keep your purchase agreement, proof of occupancy, and invoices for owner-built homes.
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File the Application: Use Form GST190 for homes purchased from a builder or Form GST191 for owner-built homes. In Ontario, include Form RC7191-ON for the provincial rebate. You can file online via the CRA’s My Account service.
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Meet Deadlines: Applications must be submitted within two years of the base date (typically the closing date or substantial completion for owner-built homes).
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Seek Professional Help: Firms like Sproule + Associates can assist with complex applications to maximize your rebate.
Processing typically takes 4–6 months, but keep records for six years in case the CRA requests verification.
Public Reaction: Hope, Skepticism, and Political Jabs
The FTHB GST Rebate has sparked lively debate. On X, users like
@VoodooDoctor, noted that while the rebate wouldn’t have swayed their decision to build, it’s a helpful boost for those who qualify. Others, like
@Dr_Adeleke, celebrated the savings potential for first-time buyers. However, critics argue the policy misses the mark in high-cost cities, with one X user asking, “What house in southern Ontario is under $1M?”
Politically, the rebate has fueled competition. Conservative Leader Pierre Poilievre proposed a similar plan, axing GST on new homes under $1.3 million, claiming it would save up to $65,000 and spark 36,000 new homes annually. Poilievre accused Carney of “stealing” his idea, while Carney’s team emphasized their plan’s broader reach with partial rebates up to $1.5 million. The Bloc Québécois has yet to weigh in but previously advocated for using federal lands for affordable housing.
Tips to Maximize Your Savings
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Combine Programs: Pair the FTHB GST Rebate with the Home Buyers’ Plan (up to $35,000 from your RRSP) or the First-Time Home Buyer Incentive (5–10% shared equity mortgage).
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Check Provincial Rebates: Ontario and Nova Scotia offer additional savings, but check your province’s rules.
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Plan Your Purchase: Sign agreements after May 27, 2025, to qualify, and ensure the home is your primary residence.
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Consult Experts: Tax professionals or real estate advisors can navigate complex cases, especially for owner-built homes or co-ops.
The Bigger Picture: Will It Solve the Housing Crisis?
While the FTHB GST Rebate is a step toward affordability, it’s not a silver bullet. Canada’s housing shortage requires millions of new homes, and high interest rates, labor shortages, and regulatory delays remain barriers. The rebate may encourage builders to construct more homes, but experts like Rishard Rameez note that many buyers are unaware of GST’s impact, limiting the policy’s immediate market effect.
For first-time buyers, though, $50,000 is nothing to sneeze at. It could cover closing costs, a down payment chunk, or even a few years of mortgage payments. As Carney put it, “It’s time to build a Canada you can afford.” Whether this rebate brings that vision closer remains to be seen, but it’s a welcome start for those ready to take the plunge into homeownership.
Let’s Hear From You!
Are you a first-time buyer excited about the FTHB GST Rebate? Or do you think it falls short in tackling Canada’s housing woes? Drop your thoughts in the comments, and let’s keep the conversation going! For more on housing programs and personal finance, subscribe to our newsletter or follow us on social media.
Sources: Canada.ca, Canadian Mortgage Trends, CHBA, WOWA.ca