While we all know that Death and Taxes are inescapable, first time home buyers are eligible for a reduction in the amount of Land Transfer Tax that is payable on closing but may also find some temporary respite with the Carney government’s Federal First Time Home Buyers GST/HST rebate (FTHB GST/HST Rebate) initiative which is in addition to the existing GST/HST rebate. This incentive is aimed at stimulating buyers who might otherwise be priced out of entering the housing market and therefore the impact of this initiative to First Time Home Buyers, Buyers, Investors and their tax-related issues in respect of Pre-Construction Purchases may be substantial.

First, let’s examine the eligibility criteria in order to qualify for the temporary relief for FTHB GST/HST rebate.

1. Firstly, you must be a “first time home buyer” meaning that you have never owned a home anywhere in the world; and
2. Secondly, you must be a purchaser who entered into an agreement on or after March 20, 2025 and before January 1, 2031 for the purchase of a newly constructed or substantially renovated property.

This new FTHB GST/HST rebate acts as a top up to the existing GST/HST new housing rebate and eliminates the GST (or federal portion of the HST) for first time home-buyers on the purchase of a new home valued up to $1million and allows first time home buyers to reduce the amount of tax payable on new construction properties between $1 million to $1.5 million.

So, how does this translate into savings for first time home buyers?

• For homes up to $1 million, first time home buyers will receive the full rebate of the 5% GST
• That’s up to $50,000.00 in savings on a $1 million home.
• For homes between $1 million and $1.5 million, the rebate phases out gradually
• For homes greater than $1.5 million there is no rebate available

Noteworthy for Ontarians is that the province is also planning on rebating the provincial portion of the HST which equates to a further $80,000.00 in savings to all buyers (not just first-time home buyers and would include investors) for a potential total tax savings of up to $130,000.00. Ontario’s expanded HST rebate applies to agreements entered into between April 1^st, 2026 and March 31^st, 2027. For this one (1) year window, the provincial and federal governments are also partnering to cover the federal 5% GST for all buyers (whether a first-time home buyer or an investor) meaning the full 13% HST is eliminated.

Let’s take a closer look at how these can affect the taxes payable under the two schemes:

HOME VALUE	HST REBATE (April 1, 2026-March 31, 2027	WHO QUALIFIES
Up to $1,000,000	Up to $130,000.00 (full 13% HST)	All Buyers
$1,000,000.00 to $1,500,000.00	Up to $130,000.00 (full 13% HST)	All Buyers
$1,500,000.00 to $1,850,000.00	Reduced rebate (sliding scale)	All Buyers
Over $1,850,000.00	$24,000.00 (existing rebate)	All Buyers

 

Outside this one (1) year Ontario supplemental incentive to make life more affordable for Ontarians, the federal FTHB GST/HST Rebate continues to apply on its own for eligible first-time home buyers

HOME VALUE	FEDERAL GST REBATE	WHO QUALIFIES
Up to $1,000,000.00	Up to $50,000.00 (full GST Rebate)	First Time Home Buyers Only
$1,000,000.00 to $1,500,000.00	Partial Sliding Scale	First Time Home Buyers Only
Over $1,500,000.00	Not Eligible	–

 

Under the existing GST/HST rebate rules, the eligibility requirements differ. You do not have to be a first-time home buyer to qualify for this rebate but you or a family member (related by blood) must live in the home. Therefore, if the property is a newly constructed property which will not be used as your principal residence but is being purchased as an investment, you will not be eligible for the GST/HST Rebate Application on closing but fear not as the lawyers at DeSantis Law can assist you with preparing and submitting the GST/HST Rental Rebate Application with CRA on your behalf after closing.

While eligible home buyers may find some relief on the tax payable on the purchase of newly constructed or substantially renovated purchases with the recent government FTHB GST/HST rebate incentives and the existing GST/HST rebates, buyers must remain mindful of the many hidden adjustments that also can impact the price you pay in the end and which could ultimately impact the Provincial Land Transfer Tax (LTT) and Municipal Land Transfer Tax (MLTT) (applicable if property is located in Toronto) which are payable on registration.

LTT/MLTT is calculated on the total consideration that a purchaser pays which includes those “additional considerations” that builders generally itemize on their statement of adjustments and include and are not limited to the following (as applicable):

• Unpaid upgrades
• Development Levies
• Education Levies
• Park Levies
• Meter Installations
• Law Society Levy
• Tarion Enrolment
• Tree Planting
• Driveway Paving
• Assignment Fees

These tax incentives may be used in conjunction with other initiatives to help buyers enter the housing market, for example:

• The Home Buyers’ Plan (HBP), which allows first-time buyers to withdraw up to $60,000 from their RRSP for a home purchase
• The First Home Savings Account (FHSA), which combines tax-deductible contributions with tax- free withdrawals for a first home
• The First-Time Home Buyers’ Tax Credit, a $10,000 non-refundable credit worth up to $1,500 in tax savings
• Ontario’s expanded rebate stacks on top of all of these for buyers who qualify.