Editor’s note: Updated from a column originally published April 10, 2026
There are few housing announcements that have generated as much reaction — both immediate and long lasting — in Ontario’s housing market as the recent changes to HST relief on new homes.
Builders are seeing a huge surge in interest and finally, after three months, there is clarity on how the tax relief will be applied and who gets to claim it.
New-home buyers should be aware that there are two overlapping programs with different timelines.
Before going through what’s been confirmed, one additional note: Throughout I’m using the word “relief” more frequently than “rebate” as buyers will not be charged the tax at all. However, this can also be considered a “rebate” since buyers can choose to pay the tax up front and then get reimbursed by the government directly. But in normal discussions, the two words are going to be used interchangeably.
There are two HST relief tracks:
- A first-time homebuyer (FTHB) relief that is retroactive to March 20, 2025, and in place for three years.
- A newer, broader relief that applies to all eligible buyers, not just first-timers. This is in place for one year, retroactive to April 1, 2026.
Let’s start with tax relief for all new-home buyers first and then go back to first-time buyers.
What to know about HST relief for all new-home buyers
The temporary HST relief program (sometimes referred to as the “enhanced” rebate program) is for Agreements of Purchase and Sale on new homes that are signed between Apr. 1, 2026, and Mar. 31, 2027. Those homes have to have started construction by Dec. 31, 2028, and be substantially completed by Dec. 31, 2031.
If you’re interested in the actual wording of the regulations you can find them here:
Federal regulation: P.C. 2026-610
Ontario regulation: O. Reg. 196/26
The types of homes that are eligible for the HST relief are:
- Any type of newly constructed home that’s used as a primary residence. It’s expected that the Canada Revenue Agency (CRA) will be more vigilant about confirming this.
- A builder’s “inventory” home is also eligible as long as it has never been occupied and you sign the Agreement of Purchase and Sale (APS) in the eligible timeframe. This should include homes originally built for another purchaser but that went into default and never closed — again, as long as it was never occupied.
- For assignment sales (when someone else is the initial pre-construction purchaser and they sell it to someone else before closing), the enhanced rebate would only be available if both the original APS and the assignment agreement are entered into on or after April 1, 2026, and on or before March 31, 2027, and all other eligibility requirements are met.
- A home you build and rent long term, although those homes have to be substantially complete by Dec. 31, 2029. Eligible new rental housing may qualify for a rebate of up to $130,000, provided the project meets the applicable criteria under the existing New Residential Rental Property Rebate (NRRPR) framework. More information on the NRRPR can be found here.
- An owner-built home is also applicable for the relief, however, construction of the home has to begin on or after Apr. 1, 2026, and on or before Mar. 31, 2027. And the home has to be substantially completed on or before Dec. 31, 2029. The owner will have to apply for the rebate themselves.
- A substantially renovated home (where 90 per cent or more of the home has been redone) also qualifies for the tax relief.
Additional dwelling units / additional residential units (ADUs/ARUs) are NOT eligible (although I would argue they should be).
The headline number, up to $130,000 in HST relief on homes up to $1 million, reflects the eight per cent provincial portion and five per cent federal GST portion.
For new-home buyers, this means that for homes priced:
- ≤ $1 million: Full relief of the 13 per cent HST that would normally be applied.
- $1 million to $1.5 million: Maximum relief of $130,000 (you pay HST on the portion above $1 million)
- $1.5 million to $1.85 million: Relief gradually phases down
- >$1.85 million: Maximum rebate of $24,000.
This is probably a good time to explain that there’s been both a GST and PST “rebate” on new homes that have been in effect for a long time.
For the GST rebate, the thresholds haven’t changed since the GST was first introduced:
- Full federal rebate: Available for new homes priced at $350,000 or less
- Partial federal rebate: Available for homes between $350,000 and $450,000
- No federal rebate: For homes $450,000 or more.
For the PST rebate, new-home buyers have been allowed to claim 75 per cent of the provincial portion, no matter the cost of a home, but only up to a maximum of $24,000.
The new — up to $130,000 HST — relief includes the above pre-existing rebate(s); it is not in addition to or stackable. And unless things change permanently, the above tax regime on new homes will be back in place as of April 1, 2027.
This also seems like a good spot to explain how new-home prices are normally advertised.
When you see a billboard stating “Homes starting at $599,000,” this refers to the base model home, but the price does include the estimated taxes and any applicable rebates or relief.
So, when you sign your Agreement of Purchase and Sale, you’ll actually see more of an itemized list that resembles a regular receipt:
Base home – $553,000
Upgrades – $0 (let’s assume none)
HST – $71,890
Old PST rebate – -$24,000
$600,890
(Fun fact: The provincial government is currently considering a requirement for builders to break out the municipal development charges that are baked into the base cost in the above calculation as well. For Ottawa, a single-detached home in the suburbs has development charges of about $65,000.)
In regular cases, the buyer “assigns” the rebate to the new-home builder, who then credits you the value of the rebate in the purchase price as above. Builders then recover it from CRA later. If you want to know how that works on the builders’ side, an infographic published by CRA of an example claim process can be found here.
Also, I understand the concern and frustration shared by purchasers who signed Agreements of Purchase and Sale just before the April 1, 2026, announcement, but who do not qualify under the eligibility rules announced by the government.
It’s expected that CRA will closely scrutinize if an agreement that was recently signed gets cancelled and then the buyer signs a new agreement. It’s likely that CRA will not grant the rebate in such cases.
The Greater Ottawa Home Builders’ Association (GOHBA), the Ontario Home Builders’ Association (OHBA) and the industry across the province did advocate hard to have everything retroactive to Mar. 20, 2025, to provide broader alignment. To be clear, the design of the program, including its eligibility criteria, timelines and implementation trigger, was determined entirely by the government.
What to know about HST relief for first-time buyers
This tax relief is for first-time homebuyers (FTHB) exclusively, although the definition of “first-timer” is expanded to include individuals or couples who have not owned or jointly owned a primary residence in the last five years.
There was significant confusion because it took the federal government nearly a year to put this into place, but the first-time homebuyers’ GST/HST rebate:
- Eliminates the GST (or federal part of the HST) for first-time homebuyers on a new home valued up to $1 million ($50,000)
- Allows first-time homebuyers to reduce the amount of tax they pay on a new home valued between $1 million and $1.5 million
The FTHB rebate applies to homes purchased from a builder where the agreement was entered into on or after Mar. 20, 2025 (when the federal government first announced its intention), and before 2031, with construction needing to be substantially complete before 2036.
Assignment agreements are ineligible if the underlying agreement predates the eligibility requirements.
Final thoughts
Expanding the HST relief to all buyers was a critical and significant move. Someone in a townhome before couldn’t necessarily afford to move up into a bigger home for their growing family. Now, they’ll be able to afford that bigger home, freeing up more attainable housing options across the market.
As we’re adding to the new housing supply, it’s really providing more housing options for everyone up and down the spectrum.
The opportunity is here — it’s a great time to buy a new house or condo, purchase a substantially renovated home, or undertake to substantially renovate a home.
