Federal government tables legislative proposal to provide GST relief for first-time home buyers

On May 27, 2025, the federal government tabled legislative proposals introducing a new GST rebate for first-time home buyers, also known as the FTHB GST Rebate. This new rebate aims to eliminate GST for first-time homebuyers on new homes priced under $1 million and reduce the GST for first-time homebuyers on new homes priced between $1 million and $1.5 million.

What is the FTHB GST Rebate?

The FTHB GST Rebate would be available to first-time home buyers if they:

• Buy a new home from a builder;
• Build, or hire someone else to build, a home on land they own or lease; or
• Buy shares of a co-operative housing corporation.

The rebate applies the same eligibility criteria and conditions as the existing GST/HST New Housing Rebate and would generally apply to the same types of housing. However, the FTHB GST rebate is modified to ensure the rebate is only claimed by first-time home buyers.

This rebate would eliminate 100 percent of the federal GST on a new home valued up to $1 million and would be phased out on a straight-line basis for new homes valued between $1 million and $1.5 million. Accordingly, no rebate would be available for new homes valued at or above $1.5 million.

Similar to the existing GST/HST New Housing Rebate, the FTHB GST Rebate can either be claimed by the individual directly or assigned and obtained through the builder via application.

Who is eligible?

A key element of the new rebate is whether an individual is a first-time home buyer, which generally requires that the following conditions be met:

• Be at least 18 years of age;
• Be either a Canadian citizen or a permanent resident of Canada; and
• Not have lived in a residential unit, whether in or outside Canada, that they owned or that their spouse or common-law partner owned in the calendar year or in the four preceding calendar years.

Rebate eligibility summary

The following table summarizes the specific eligibility criteria in respect of the different types of housing:

Limitations of the rebate

The proposals include a series of rules that limit access to the FTHB GST Rebate in certain circumstances to ensure it is only available to first-time home buyers and adheres to the conditions as summarized above. Individuals and builders should be aware of these limitations and determine whether they apply to each specific situation, as it may impact the rebate eligibility.

What comes next?

The FTHB GST rebate is a welcome change intended to help individual Canadians, but it is not yet law. The bill must first be passed by parliament and receive royal assent.

However, with an effective date of May 27, 2025, individuals and builders should familiarize themselves with the new rebate and its eligibility criteria in preparation for its implementation.