GST and First Time Home Buyers in 2025

On May 27, 2025, the Federal Government issued a press release that provides for a Goods and Services Tax (“GST”) rebate for first time home buyers (FTHB) of new homes (and co-ops). The press release indicates that the Excise Tax Act will be amended to provide FTHB with a full GST rebate on homes under $1,000,000, and a partial rebate on homes between $1,000,000 and $1,500,000.

Subject to agreement with the Builder, a FTHB will pay the GST on the closing of a purchase of a qualifying home, but will be eligible for a rebate of the full amount (up to $50,000). The rebate is phased out in a linear manner from $1,000,000 to $1,500,000. So, for example, a home that is $1,400,000 would lose 80% of the rebate – in other words, it would still be eligible for a 20% ($10,000) rebate.

As the legislation has not yet been passed (and the devil is in the details), there are many questions we are unable to answer at this time. Below are some frequently asked questions we received, together with answers based on available materials. We will continue to provide updates as more details emerge.

FREQUENTLY ASKED QUESTIONS

Can you clarify what a FTHB is with respect to the GST rebate? 

A person is considered a FTHB if they

• Are at least 18 years of age;
• A Canadian citizen or permanent resident of Canada; and
• Not have lived in a home, whether in or outside of Canda, that they owned or that their spouse or common-law partner owned in the calendar year or in the four preceding calendar years.

When is the starting date of the rebate?

The agreement of purchase and sale must be entered into on or after May 27th, 2025 and before 2031. The construction of the home must begin before 2031 and is substantially completed before 2036. The rebate is not retroactive to contracts entered into prior to May 27th, 2025.

If a contract was entered into in 2023, but completion is scheduled for 2026, does the GST exemption apply?

No. The contract must be entered into after May 27, 2025

Can a client re-do their offer to purchase so the new contract is entered into after May 27th, 2025?

Based on tabled legislation, this would be disallowed in respect of the sale of a new home under the new agreement (and would not be allowed in respect of the varied or altered agreement).

Can you clarify partial rebates on properties worth between $1,000,000 and $1,500,000?

The rebate is calculated on the “pre-GST” purchase price and linearly moves from a full rebate (at $1,000,000) to zero rebate (at $1,500,000). If the purchase price was $1,200,000 (exclusive of GST), then the rebate will be $30,000. If the purchase price was $1,100,000 (exclusive of GST), then the rebate will be $40,000. If the purchase price was $1,300,000 (exclusive of GST), then the rebate will be $20,000.

If one buyer is a FTHB and the other spouse is not, can they go on title as 99% / 1% tenants in common to save almost all the GST?

Based on tabled legislation, there will be no benefit for the GST rebate to go on title as 99% / 1%. So long as one registered owner qualifies for the exemption, then the whole rebate applies.

If a person has a pre-sale condo under $1,000,000 closing this year, and he/she would like to add his/her immediate family member on the contract and put their daughter/son on the property title, e.g. daughter or son who is a First-Time Home Buyer. Would the property purchase still be eligible for the GST rebate?

Based on tabled legislation, if a FTBH assumes the rights and obligations of another person pursuant to an assignment sale, the FTHB rebate would not be available if the original agreement of purchase and sale was entered into before May 27th, 2025.

Does the new GST exemption extend to Buyers purchasing a vacant property within the first year of completion from a Seller who is not the original builder? Additionally, if the Buyer is eligible for a rebate and GST has effectively been paid twice, would the Seller still be entitled to claim a rebate as well?

Based on tabled legislation, the FTHB GST rebate is available if:

• You buy a new home from a builder;
• You build, or hire someone else to build, a home on land you own or lease; or
• You buy shares of a co-operative housing corporation.

Purchasing a vacant property from a person who purchased the property from a Builder would not qualify for the rebate.

Is this now in effect or is it still a proposal?

The Government has tabled a notice of Ways and Means Motion in Parliament with proposals for a FTHB rebate. In other words, it is not yet law, but is likely to become law in short order.

Does the buyer need to apply and qualify the GST portion of the purchase price and then apply to get the refund?

The buyer will need to be in a position to pay the GST at closing and apply for a refund via the FTHB GST rebate at a later date, unless the developer has agreed to credit the rebate on closing.

What constitutes a FTHB with respect to the new GST rebate? Can they use the GST rebate if it has been 4+ years since owning any property, if they have never used the new home GST rebate?

The RRSP Home Buyers’ Program has a similar qualification for FTHB, not to have owned a home in the preceding four calendar years. Even if a person has owned a home, so long as they have not owned the home within the preceding four years, they are considered a FTHB. While a person can qualify to be a FTHB under the RRSP HBP more than once, the FTHB GST Rebate is available only once to the person and their spouse.

Is the FTHB GST exemption similar to the PTT exemption?

Unlike the FTHB PTT exemption, the FTHB GST rebate is not divisible and is not based on ownership of the property.

Call Stan 604-202-1412