Election Promises and changes to GST/HST on Pre-Construction Homes – March 2025

By David Young

On March 20, 2025 Liberal Party Prime Minister Mark Carney vowed to scrap the GST for first time home buyers of pre-construction homes at or under $1 million.

Conservative Party leader Pierre Poilievre previously announced in October 2024 his pledge to scrap GST for ALL buyers of pre-construction homes at or under $1 million.

Now, let’s look at how that may impact home buyers in Ontario. In Ontario, pre-construction homes are subject to HST (Harmonized Sales Tax), which is a combination of the federal Goods and Services Tax (GST) at 5% and the provincial sales tax (PST) at 8%, totaling 13%.

There are two HST Rebates available:

• GST/HST New Housing Rebate (otherwise known as the “HST Residential Rebate”);
• GST/HST New Residential Rental Property Rebate (otherwise known as the “HST Rental Rebate”).

The large majority of builders in Ontario will presume that each purchaser will live in the property as their primary place of residence, and therefore already reduce the purchase price by the combined Federal and Provincial HST Residential Rebate amount to show a sticker purchase price on the Agreement of Purchase and Sale.

The HST Rebate amounts differ depending on the purchase price. There are various brackets of calculations between:

1. $0 and $368,200 – combined existing Federal AND Provincial Rebate;
2. $368,201 and $424,850 – combined existing Federal and Provincial Rebate;
3. $424,851 and $484,500 – combined existing Federal and Provincial Rebate; and
4. $484,501 and above – Provincial Rebate only.

For the purposes of this article, we will presume we are discussing a property worth $484,501 and above. At this price, only a Provincial Rebate of $24,000 is available. There are no Federal Rebates.

An example for the purchase of a property sold to you by a builder at the cap of the proposed change of $999,999 is as follows:

• Sticker purchase price of $999,999;
• Net price before tax $906,193.81;
• 5% GST equals $45,309.69;
• 8% HST equals $72,495.50;
• Total 13% HST equals $117,805.19;
• Less the HST Residential Rebate of $24,000;
• Equals the sticker purchase price of $999,999.

Therefore if either party follows through with their election promise (for all buyers under a Conservative government or first time home buyers only under a Liberal government), you can see from the above example that this may reduce the purchase price by up to $45,309.69.

If you have any questions about the proposed changes or existing rules of HST on pre-construction properties, please do not hesitate to reach out to David Young at 365-509-2029 Ext.106 or dyoung@sorbaralaw.com