The First Time Home Buyer GST Rebate (FTHB GST Rebate). This is what we know so far!

New GST Rebate Helps First-Time Home Buyers Save Up to $50,000

In a major move to make homeownership more affordable for young Canadians, the federal government has announced a new Goods and Services Tax (GST) rebate for first-time home buyers. The initiative, unveiled on May 27, 2025, by Minister of Finance and National Revenue François-Philippe Champagne, is designed to reduce the upfront cost of buying a new home and stimulate new residential construction across Canada.

What Is the First-Time Home Buyers’ GST Rebate?

The new First-Time Home Buyers’ GST Rebate (FTHB GST Rebate) allows qualifying individuals to recover up to 100% of the GST (or the federal portion of the HST) on new homes valued up to $1 million (i.e. before any excise taxes such as HST). This rebate could mean savings of up to $50,000 for eligible buyers. Homes priced between $1 million and $1.5 million will see the rebate gradually phased out through a straight line depreciation, and no rebate will be available for homes over $1.5 million (e.g. FTHB GST Rebate on a $1.25 million purchase will be $25,000).

Who’s Eligible?

To qualify for the FTHB GST Rebate, buyers must meet the following criteria:

• Be at least 18 years old
• Be a Canadian citizen or permanent resident
• Not have owned anywhere in the world or lived in a home owned by their spouse or common-law partner in the current or past four calendar years

The rebate applies whether you’re:

• Purchasing a new home from a builder
• Building your own home on land you own or lease
• Buying shares in a housing co-operative

In all cases, the home must be your primary residence, and you must be the first person to occupy it once ready.

How the Rebate Works

The rebate is available on purchases made on or after May 27, 2025, and before 2031, with the condition that construction must begin before 2031 and be substantially completed by 2036.

Here’s how it breaks down:

• New Home Purchases from Builders: Buyers can recover up to $50,000 of GST/HST paid on the purchase price.

• Owner-Built Homes: First-time buyers who build their own homes or hire someone to do it can recover GST/HST paid to construct the home —again, up to $50,000, however it remains unclear if this can be recovered from the construction cost without having paid HST on the self-supply or if you can claim input tax credits as well.

• Co-operative Housing Shares: Buying into a co-op? You may also qualify for the rebate if the co-op paid GST/HST on the property and you’re the first resident of the unit.

In all of the above scenarios at least one of the buyers or owners who built the home must be a first-time home buyer and the first to live in the home as their primary residence.

Important Limitations

To maintain the integrity of the program and target true first-time home buyers, several restrictions apply:

• The rebate can only be claimed once in a lifetime, and not by those whose spouse or common-law partner has already claimed it.
• It doesn’t apply to assignment sales if the original agreement was signed before May 27, 2025.
• If an agreement signed before May 27 is later canceled or significantly altered to appear as new, the rebate may be denied.

What About Purpose-Built Rental Housing?

Homes purchased in co-ops that already benefit from the 100% GST rebate for purpose-built rental housing will not be eligible for the FTHB GST Rebate.

Final Thoughts

This new GST rebate is a meaningful step toward making homeownership more attainable for first-time buyers, especially in today’s challenging real estate market. With up to $50,000 in savings on the table, it could provide the financial boost needed to help thousands of Canadians unlock the door to their first home.

If you’re planning for the first time to buy a new home or build one for yourself in the coming years, this rebate is definitely something to factor into your budget.

How will builders credit this rebate in advance and take an assignment of it? Like the GST/HST New Housing Rebate builders will consider ways to include the FTHB GST Rebate in the purchase price while taking an assignment of your rebate rights.  Both the FTHB GST Rebate and the GST/HST New Housing Rebate require that a purchaser be at least 18 years old, a Canadian resident or citizen, and be the first occupant as their primary residence.  The GST/HST New Housing Rebate will allow a relation of the purchaser to move in as the first occupant and as their primary residence, but the FTHB GST Rebate requires that at least one of the purchasers of a home move in as the first occupant and as their primary residence.  Hence, it appears that purchasers relying on the FTHB GST Rebate cannot grant occupancy to any relations alone without also moving in as their primary residence. Furthermore, unlike the GST/HST New Housing Rebate builders will have to be more cautious in trying to assure themselves that at least one of the purchasers of the home is in fact a first time home buyer and that their spouse, if any, did not own a home in the same calendar year or preceding four years where the purchaser lived in it as well.  To complicate things even more, it appears that for purchases under $450,000, the total GST rebate will be a combination of the FTHB GST Rebate and the GST/HST New Housing Rebate.  Finally, there is some speculation that the Province of Ontario will consider following in the same path with a similar rebate for the provincial component of the HST.