The federal government announced an enhanced housing rebate for new-home builders and first-time home buyers on May 27, 2025. Under the proposed legislation, the new first-time home buyers’ (FTHB) rebate will be 100% of the goods and services tax (GST) or federal portion of harmonized sales tax (HST) payable on a new home to a maximum rebate of $50,000 where the new home is priced at $1 million.
New homes priced between $1 million and $1.5 million will be eligible for a partial rebate under a linear phase-out, with no rebate for a home priced at $1.5 million or more.
For purposes of the FTHB GST rebate, a first-time home buyer is a Canadian citizen or permanent resident who is at least 18 years of age and who, in the current and preceding four calendar years, has not occupied a residential unit in or outside Canada owned by them, their spouse, or common-law partner.
Key considerations for homes purchased from a builder
To be eligible for a FTHB rebate of tax on a new single-family home or residential condominium unit, the individual purchaser must be a first-time home buyer who is acquiring the property for use as their primary place of residence and who is the first individual to occupy the property as a place of residence after substantial completion. In addition:
- the purchase and sale agreement must be entered into after May 26, 2025, and before 2031;
- the construction or substantial renovation must begin before 2031;
- the construction or substantial renovation must be substantially completed before 2036; and
- ownership must be transferred to the purchaser before 2036.
The rebate may be assigned to the builder, who can offset the purchase price of the home by the rebate amount and submit the application to the Canada Revenue Agency (CRA) on the purchaser’s behalf.
The FTHB rebate will not be available where a purchase and sale agreement was entered into before May 27, 2025, and is later varied, altered, or assigned, or where an agreement was entered into before May 27, 2025, and is terminated and another agreement is entered into after May 26, 2025.
Key considerations for owner-built homes
Similarly, a first-time home buyer who builds or hires a builder to build a new home as their primary place of residence may qualify for the FTHB rebate where:
- the construction or substantial renovation begins after May 26, 2025, and before 2031;
- the construction or substantial renovation is substantially completed before 2036; and
- the individual first occupies the residential complex as a place of residence before 2036.
Builder considerations under the new first-time home buyer rebate
There are various implications that new home builders will need to consider under these legislative proposals:
- Net pricing will vary depending on whether the purchaser is a first-time home buyer.
- Delays in construction start or completion could disqualify a purchaser from a FTHB rebate.
- Whether a builder is required to take additional steps to confirm whether a purchaser qualifies as a first-time home buyer.
How BDO can help
We can assist in navigating these new rules to help avoid unwelcome surprises in administering the rebate for home buyers. Completing rebate applications can be challenging, in particular, in relation to substantial renovations. Given the value of the rebate and the risk of rejection by the CRA, it is important to ensure that these applications are correctly completed and filed on time.
Reach out for guidance
The information in this publication is current as of June 18, 2025.
This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.