GST Rebate on New Homes: How It Works

Firsts come first — for buyers and builds.

Ottawa’s recent GST rebate helps put first-time buyers at the front of the line for a fresh new home, and (ideally) gives new-home construction a nudge to match.

This rebate was confirmed in the Fall 2025 Liberal Budget. It helps qualifying first-time buyers of new builds — from detached houses to condos — save up to a full 5% off the purchase price, depending on the details:

Full GST rebate on homes up to $1M purchase price
Scaled down rebate between $1M – $1.5M
No rebate above $1.5M

For a $1M new build price tag, the rebate could translate to $50K in first-time savings, providing significant relief from the upfront costs of becoming a homeowner or helping to increase your down payment.

More affordability relief for first-time buyers.

The federal government 100% GST rebate, introduced in May 2025, gives eligible first-time buyers of newly built homes another break. Here’s what it covers, how it compares to the FTHB's Tax Credit, and why it matters for new-home affordability.

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Why this GST rebate matters.

For years, the older GST New Housing Rebate capped out at a $450K home price, a limit far below today’s home price averages, especially in larger city centres.

The May 2025 government update modernized those thresholds for targeted relief where it’s needed most: helping first-time buyers afford new homes.

How the rebate works

Typically, the GST rebate doesn’t reduce the new home’s price upfront, but reduces the final amount owed.

Two common ways it’s applied:

Builder-applied rebate (most common). For new homes bought directly from a builder, the rebate is usually applied at closing. You pay the net amount (minus rebate), and the builder claims it from the government afterward.

Buyer-claimed rebate. If you build your own home (or hire a contractor to do it), you pay the GST in full and then submit a rebate claim to the Canada Revenue Agency (CRA) once your home is substantially complete.

Either way, the rebate process eventually ensures your savings.

Who qualifies for this GST rebate today?

To claim the rebate as a first-time home buyer, you (or your spouse or common law partner) must:

Be 18 or older (depending on provincial legal adult status)
Be a Canadian citizen or permanent resident
Have not owned a home (in Canada or abroad) in the year of purchase or the four years prior
Intend to live in the home as your principal residence
Have not received a prior GST rebate on a new build

To be eligible for this (new) rebate, home purchase agreements must be signed on or after May 27, 2025.

Qualifying homes, and what doesn’t count.

In addition to qualifying as a first-time home buyer, you’re eligible if you:

Buy a newly built home directly from a builder or developer
Build or hire someone to build your own home
Purchase shares in a new housing co-op

Resale homes don’t qualify — they’re exempt from GST, so there’s no tax to rebate.