What the New HST Rebate Means for First-Time Home Buyers in Ontario
If you’re buying your first home in Ontario and considering a newly built or substantially renovated residence, there is significant good news: the provincial government of Ontario has announced a major new tax-incentive. Alongside a federal rebate proposal, this measure has the potential to reduce your tax burden by up to 13 % on the purchase of certain homes. As a real estate professional, I want to walk you through how it works, who qualifies, and what you should be aware of.
What’s changing?
At the federal level, the government has proposed a new first-time home buyer rebate: the First‑Time Home Buyer GST/HST Rebate (FTHB GST/HST Rebate). It would allow eligible first-time buyers to recover 100% of the federal portion of the HST (i.e., the GST/5 %) on newly built homes valued up to $1 million. Homes between $1 million and $1.5 million would receive a partial rebate, phasing out at $1.5 million.
At the provincial level in Ontario, the government announced on October 28, 2025 that it will introduce a matching rebate: the full 8% provincial portion of the HST on qualifying new homes valued up to $1 million for first-time buyers. Homes in the $1 million to $1.5 million range would see a phased reduction.
When combined, these federal + provincial rebates could offer total tax-savings up to ≈ 13% of the purchase price (5% federal + 8% provincial) on eligible new homes up to $1 million.
Who qualifies? Key eligibility rules
You must be a first-time home buyer: generally meaning you (and your spouse/common-law partner) have notowned and occupied a qualifying home in the year of purchase or in the four preceding calendar years.
The home must be new or substantially renovated, be purchased from a builder (or built/renovated for you) and be intended as your primary place of residence.
For the federal rebate: the agreement of purchase & sale with a builder must be entered into on or after May 27, 2025 and before 2031; construction must begin before 2031 and be substantially completed before 2036.
For the Ontario rebate: the provincial rules will mirror the federal timeline and requirements.
The rebate applies to the provincial HST portion (8%) in Ontario on newly-built homes (in this announcement) for first-time buyers.
What it means in real dollars
Let’s assume you’re buying a newly built home in Ontario for $1 000 000:
Without the rebates: you’d pay HST on the purchase (roughly 13% of the home price = $130,000 tax portion) (5% federal + 8% provincial).
With the federal rebate (100% of the federal 5% on up to $1 million): that 5% becomes zero for you => up to ~$50,000 savings.
With the provincial rebate (100% of the provincial 8% on up to $1 million): that 8% becomes zero for you => up to ~$80,000 savings.
Total potential savings ≈ $130,000 (which is ~13% of the $1 million price) on a new home.
Of course, actual savings depend on the purchase price, how the home is structured, builder pricing, etc. But the headline number is substantial.
Why this matters
For first-time buyers this level of tax relief greatly improves affordability and may help you qualify for a larger mortgage or a nicer home.
For builders and the new-home market, this incentive can stimulate demand for new home construction, especially in the under-$1 million price bracket.
For our local market (e.g., Stratford and mid-Ontario), such incentives may influence the mix of new homes being built and could provide opportunities for those deliberating “should I buy now or wait?”
Important caveats & next steps
This rebate is proposed, not yet fully in law (for the federal portion especially). Until legislation receives royal assent, details could change.
Eligibility is strict: make sure the home qualifies as new or substantially renovated, you qualify as a first-time home buyer, the purchase date and builder agreement date fall in qualified periods.
Be sure the builder’s pricing incorporates the rebate properly (builders may credit the rebate up-front or you may have to apply later).
Do not rely solely on this incentive: you should still arrange mortgage pre-approval, assess all other buying costs (land‐transfer tax, legal fees, closing costs, maintenance, etc.).
If you’re looking in the resale market (vs new build), this rebate may not apply. This incentive is aimed at new or substantially renovated homes.
For local markets like Stratford, even with incentives, you still need to evaluate whether the home matches your lifestyle (location, access, maintenance, community) and long-term value.
My recommendation for you
If I were advising you directly:
Actively monitor new-home developments and builder inventory in your desired area, especially homes priced up to ~$1 million, because these will maximise the rebate.
Ask your builder or seller whether the proposed federal & provincial rebates have been factored into the price and whether you will need to apply after closing or if it’s already credited.
Compare new vs resale: incentives make new builds more appealing, but resale homes may still offer better value or location—evaluate both.
Lock in finance early: the tax savings help, but interest rates, qualification, and down payment still matter.
Consult your tax/legal advisor: make sure you understand the application process for the rebate and any conditions.
If you’re delaying purchase, follow how these rules evolve—the earlier you are in the eligibility window the better your chance to capture full benefit.
Conclusion
This is a major moment for first‐time home buyers in Ontario: the combination of federal + provincial incentives to rebate up to 13 % of the purchase price on eligible new homes valued up to $1 million is unprecedented. As your local REALTOR®, I’m here to guide you through how this applies in our area market, evaluate builder offerings, review contracts, and help you make the best decision. If you have questions or want to explore new-home options that might qualify for this rebate, just let me know. I’m ready when you are.
Warm regards,
Laurita Almeida, REALTOR®