Oct 2025
Ontario Announces Conditional GST/HST Rebate
For New Homes and First-Time Home Buyers only
By David Young
In our article from May 2025 we discussed the federal government’s commitment to provide a full rebate of the 5% federal portion of the HST/GST for first-time home buyers purchasing newly constructed homes, there have been new developments at both the federal and provincial levels.
The proposed rebate, originally expected to take effect on May 27, 2025, would apply to qualifying first-time home buyers of new or substantially renovated homes. It would provide a full rebate of the GST for homes valued up to $1 million, a phased-out rebate for homes valued between $1 million and $1.5 million, and no rebate for homes above $1.5 million.
The measure would cover agreements of purchase and sale entered on or after May 27, 2025, and before 2031, provided construction is substantially completed before 2036.
However, as of October 28, 2025, the Excise Tax Act has not yet been amended to reflect this change, and the proposal has not received Royal Assent. While the Canada Revenue Agency’s backgrounder confirms the government’s intent, the rebate remains a proposal until Parliament enacts the necessary amendments.
For additional background on the federal plan, see our earlier analyses:
The Ontario government announced that it will introduce a matching rebate for the 8% provincial portion of the HST, but only if the federal government proceeds with the proposed changes to the Excise Tax Act.
According to the provincial release, Ontario intends to:
- Provide a full rebate of the 8% provincial HST on qualifying first-time buyers of newly constructed or substantially renovated homes valued up to $1 million.
- Phase out the rebate between $1 million and $1.5 million, mirroring the federal structure.
- Apply no rebate above $1.5 million; and
- Include the measure in the 2025 Fall Economic Statement, pending federal implementation.
The new Ontario rebate would be available in addition to the existing Ontario HST New Housing Rebate, which already provides relief of up to $24,000. Together, the two rebates would ensure that qualifying first-time buyers receive the full 8 per cent provincial portion on homes up to $1 million, with a phased reduction between $1 million and $1.5 million.
The government estimates that if both levels of government move forward, first-time buyers could see combined savings of up to $130,000 on a qualifying new home.
What This Means for Buyers
While both governments have publicly committed to making housing more affordable for first-time buyers, neither measure is yet in force. Until the federal amendment to the Excise Tax Act receives Royal Assent and Ontario’s legislation formally passes, these rebates remain policy announcements, not law. Buyers should exercise caution when entering agreements before these measures take effect and should review contract terms to ensure they understand how any rebate might apply once enacted.
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