Big Win for First-Time Buyers: Zero GST on New Homes Under $1M a Reality

Prime Minister Mark Carney’s Liberal government has officially delivered on one of its most high-profile campaign promises — and it’s great news for first-time homebuyers across Canada.In a bold move aimed at addressing housing affordability, the government has rolled out a new First-Time Home Buyers’ (FTHB) GST rebate for those purchasing newly built homes under $1 million. This policy shift could mean savings of up to $50,000 for eligible buyers — a significant financial break during a time when housing costs remain high and inflation continues to impact everyday affordability.

What’s Changing?

The headline change: New homes purchased for under $1 million by first-time homebuyers will now be exempt from paying GST. When combined with the existing GST/HST New Housing Rebate, the total tax relief is substantial — and could be the difference between affording a starter home or staying on the sidelines. But the benefits don’t stop at the $1 million mark. For homes priced between $1 million and $1.5 million, the government has introduced a linear phase-out of the rebate. For example, a brand-new home valued at $1.25 million will now qualify for a 50% GST rebate, saving the buyer up to $25,000.This isn’t just a tweak to existing rules — it’s a real opportunity for first-time buyers to break into the market with a bit less financial strain. The goal is to increase access to homeownership and reduce the upfront tax burden that can deter buyers, especially in high-demand cities where even entry-level homes often push the $1 million mark.

Who’s Eligible?

The new FTHB GST rebate isn’t automatic for everyone — there are criteria you need to meet:

• You must be a first-time homebuyer, meaning you haven’t owned a home in Canada or abroad during the current calendar year or the previous four years.
• You must be at least 18 years old.
• You need to be a Canadian citizen or permanent resident.
• If you’re buying with a spouse or common-law partner, both of you must meet the first-time buyer definition to qualify.

This means even those who’ve lived abroad or in a home owned by their partner may not be eligible, depending on their recent housing history.

Why This Matters

In many parts of Canada — especially in cities like Vancouver, Toronto, Victoria, and even Kelowna — it’s almost impossible to find new construction under $1 million. For young buyers and new Canadians, this rebate could be a critical stepping stone toward owning a home.By reducing the GST burden, the government hopes to spur demand for new housing construction while making it easier for first-time buyers to enter the market. Whether this policy will also help with supply-side issues remains to be seen, but for now, it’s a win for many would-be homeowners.

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Bottom Line

If you're a first-time buyer dreaming of owning a newly built home, this rebate might be the boost you need. While home prices are still a hurdle in many markets, this new GST relief could save you tens of thousands of dollars — money you can instead put toward your down payment, closing costs, or even furnishing your new space.As always, speak with a real estate agent or mortgage advisor to ensure you meet the criteria and understand exactly how much you could save. CONTACT ME