Mar 2026
Ontario Expands HST Rebate
What the March 25th announcement means for Pre-Construction Home Buyers
By David Young
Following up on our recent article on the Federal First-Time Home Buyers’ GST/HST Rebate (“Federal FTHB GST/HST Rebate”) published on March 12, 2026 here, the Government of Ontario has now released its highly anticipated provincial counterpart.
Announced on March 25, 2026[1], as part of the provincial budget[2], Ontario is temporarily expanding HST relief on new homes[3]. While the recently announced Federal FTHB GST/HST rebate was strictly limited to first-time buyers[4], Ontario’s new provincial proposal significantly widens the net to provide relief to both previous homeowners and First-Time Home Buyers.
Here is a comprehensive breakdown of the new Ontario provincial HST rebate rules, how they distinguish between first-time home buyers and existing home owners, and crucial clarifications for buyers with existing purchases.
1. The Temporary Expansion: Relief for previous home owners.
Under the new provincial proposal, Ontario is offering a temporary expansion of HST relief for all eligible buyers of new homes—including repeat buyers and residential property investors - for one-year.
The One-Year Window:
To qualify for this expanded relief, purchasers must navigate a strict timeline.
● The agreement of purchase and sale with the builder must be signed within a one-year window: between April 1, 2026, and March 31, 2027;
● Construction of the home must begin on or before December 31, 2028;
● Construction must be substantially completed on or before December 31, 2031; and
● The newly built home must be used as a primary place of residence or as a residential rental property.
The Financial Breakdown:
Through a cost-sharing agreement with the federal government, eligible purchasers will receive relief equivalent to the full 13% HST on homes valued up to $1 million.
● Homes Under $1 Million: Ontario will provide relief equivalent to the full 13% HST, up to a maximum of $130,000;
● Homes Between $1 Million and $1.5 Million: The $130,000 maximum rebate will be maintained (meaning not all of the 13% HST will be rebated);
● Homes Between $1.5 Million and $1.85 Million: A reduced rebate will be available, decreasing proportionally as the purchase price increases;
● Homes Above $1.85 Million: Purchasers will not receive the expanded relief but will qualify for $24,000 in HST relief under the pre-existing “legacy” GST/HST New Housing Rebate rules.
2. Alignment for First-Time Home Buyers
If you are a first-time home buyer, your eligibility timeline is notably broader than the one-year window outlined above.
As discussed in our March 12, 2026 article[5], the federal government’s 5% GST removal applies to agreements signed on or after March 20, 2025. In tandem with the March 25, 2026 provincial budget announcement, Ontario is taking steps to align the effective date of its 8% provincial rebate for first-time buyers with the federal government's earlier effective date.
This means first-time home buyers who signed agreements for new builds as early as March 20, 2025, will be eligible for the combined 13% relief, provided they meet the remaining standard criteria.
3. Understanding the "Sticker Price": The Legacy HST Rebates
Before calculating your potential savings under these new rules, it is critical to understand how builder pricing actually works.
For over 20 years, the standard GST/HST New Housing Rebate ("Legacy HST Residential Rebate") or the New Residential Rental Property Rebate ("Legacy HST Rental Rebate") have been in place. Under this legacy system, buyers are generally entitled to a $24,000 provincial rebate for properties priced over $484,501, either included in the purchase price or later after closing.
Most presume that purchasers intend to live in the property, and qualify for the Legacy HST Residential Rebate. To make their properties look more attractive, builders proactively deduct this $24,000 from the purchase price, effectively lowering the advertised "sticker price" you see on the sales brochure or Agreement of Purchase and Sale.
Why this matters now: When calculating your potential savings under the newly expanded provincial rules, you cannot simply deduct a straight 13% from the builder's advertised sticker price. You must dig deeper and have your Agreement of Purchase and Sale reviewed to confirm how the builder has sold it to you. You must ask which rebates are included or excluded already.
4. Applying for the Rebates: Who Pays and Who Applies?
For the existing Legacy HST Residential Rebate, builders have historically deducted $24,000 directly from the sticker purchase price. The builder pays the full amount of HST and then applies for the funds back themselves. Purchasers simply assign their right to the rebate over to the builder, meaning the buyer does not need to do, pay, or apply for anything back.
At this stage, we are unsure if builders will universally follow a similar framework for these new federal and provincial rebates. Depending on your Agreement of Purchase and Sale, the process may be one of the following:
● If your Agreement of Purchase and Sale (APS) was signed after March 20, 2025, and before these new announcements in March 2026: Your APS will likely not have any clauses or wording inserted covering these new rebates. This means that you will need to pay the sticker purchase price under the legacy program and apply for the NEW Federal and Provincial Rebates directly with the Canada Revenue Agency (CRA) after closing. In short, you must pay the funds upfront and apply for the refund yourself after closing. You may apply through your MyCRA account online or via a paper application. The CRA is recommending the online method, as it is alleged to have much faster response times;
● If you sign an APS after April 1, 2026, AND there is a clause stating that the builder will handle each of these rebates on your behalf: You will receive the benefit of the rebates directly on closing with a reduced balance owing on the Final Statement of Adjustments. In this scenario, you do not need to apply, deal with the CRA, or wait months for funds to be refunded to you.
● If you sign an APS after April 1, 2026, and it does NOT have a clause covering these rebates: You will need to pay the full amount on closing and apply for the funds back later from the CRA, similar to the first scenario.
It is very important to have your APS reviewed by a real estate lawyer BEFORE signing or firming up on the purchase, to ensure that the appropriate clause is negotiated to protect you on Final Closing.
As a reminder, when purchasing a pre-construction condo, you are provided with a 10-day rescission/cooling-off period automatically. If purchasing a freehold property, you are NOT entitled to any form of cooling-off period, unless you negotiate in advance.
These rules will change as of January 1, 2027, with the amendment to Section 53 of the New Home Construction Licensing Act, whereby new freehold home purchases will have a mandatory 10-day cooling-off period. Until this point, you must negotiate a cooling-off period.
5. Common Questions: Existing Agreements, Rentals, Terminations, Assignments
Since the announcement, our office has received numerous inquiries from clients hoping to capitalize on the new rules.
Existing Agreements prior to March 20, 2025/April 1, 2026
If you signed an APS with a builder a number of years ago (e.g., in 2022) and your home has not yet closed, these new rebates do not apply to you. The intention of both levels of government is strictly forward-looking - to sell inventory units and encourage new construction.
As a reminder, to qualify a First-Time Home Buyer must have signed their agreement on or after March 20, 2025. For non-first-time buyers, the agreement must be signed on or after April 1, 2026.
Investment and Rental Properties:
The expanded provincial rebate does apply to properties purchased for investment purposes to be used as single-unit residential rental properties. Specifically, if you acquire a new home where construction began before March 31, 2026, you can still qualify if the purchase agreement is signed between April 1, 2026, and March 31, 2027, provided construction is substantially completed on or before December 31, 2029.
Anti-Avoidance: Terminating/Canceling and Resigning Contracts:
Clients have asked if they can simply cancel an old agreement and sign a new one with the builder after April 1, 2026, to secure the rebate. Do not attempt this. Under federal anti-avoidance measures—which the province is fully expected to mirror—if an original agreement was entered into before the eligibility date, subsequently canceled, and replaced with a new agreement for the same property, the rebate will be firmly disallowed. These rules exist explicitly to prevent the "gaming" of the system.
Assignment Sales:
If you purchase a property by way of assignment (taking over the contract from the original purchaser) after April 1, 2026, it does not reset the clock. The CRA bases eligibility on the date the original agreement was signed between the builder and the initial purchaser/Assignor. If the original contract pre-dates the March 20, 2025, or April 1, 2026, cut-offs, the property is ineligible for the new enhanced rebates.
6. Looking Ahead
Ontario has committed to these robust changes and the estimated $1.4 billion in provincial tax relief. On March 30, 2026[6] the Provincial and Federal governments announced the “Partnership to Build Homes, Transit and Communities” agreement. The Federal government will provide Ontario with a payment of $875 million to total an estimated $2.2 billion total in tax relief. The expanded program remains subject to passage of Federal legislation of this article dated March 30, 2026. The Canada Revenue Agency (CRA) will ultimately administer the HST and associated rebates.
If you have any questions about calculating your rebate, the proposed changes or existing rules of HST on pre-construction properties, please reach out to David Young at 365-509-2029 Ext.106 or dyoung@sorbaralaw.com
[1] https://news.ontario.ca/en/release/1007212/ontario-expanding-hst-rebate-to-lower-the-cost-of-new-homes-in-partnership-with-the-federal-government
[2] https://budget.ontario.ca/2026/chapter-1b-costs.html#section-1
[3] https://budget.ontario.ca/2026/annex.html#section-2
[4] https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/gst-hst-rebates/first-time-home-buyers-gst-hst-rebate.html
[5] https://www.sorbaralaw.com/resources/knowledge-centre/publication/canada-lowering-costs-for-first-time-home-buyers-of-pre-construction-homes
[6]
https://news.ontario.ca/en/release/1007227/ontario-and-canada-sign-historic-partnership-to-build-homes-transit-and-communities