The New Federal Rebate Could Cut the Cost of a Qualifying New Home by as Much as $50,000
First-time home buyers in Canada can now apply for a federal GST/HST rebate worth as much as $50,000 when buying or building a qualifying new home. The size of the rebate depends on the purchase price and whether the buyer meets the eligibility requirements.
Eligible first-time buyers can recover 100% of the federal GST on a qualifying new home priced at up to $1 million, to a maximum rebate of $50,000. The rebate is gradually reduced for homes priced between $1 million and $1.5 million and disappears at $1.5 million.
How Much Is the Rebate?
The First-Time Home Buyers’ GST/HST Rebate applies to the federal portion of the GST/HST charged on qualifying new housing.
For a qualifying home with a value of up to $1 million, an eligible first-time buyer can receive a rebate equal to 100% of the federal GST paid, up to a maximum of $50,000.
The rebate is gradually reduced when the home’s value is above $1 million.
| Home Value | Federal Rebate |
|---|---|
| Up to $1 million | Up to $50,000 |
| $1 million to $1.5 million | Rebate gradually reduced |
| $1.5 million or more | No FTHB rebate |
This Is for New Homes — Not Most Resale Homes
One of the most important details is that this rebate does not apply to the typical purchase of an existing resale home.
It is designed for qualifying newly constructed or substantially renovated housing where GST/HST applies.
It can potentially apply when you:
- buy a new home from a builder,
- buy a substantially renovated home from a builder,
- build a home yourself or hire someone to build it, or
- purchase certain qualifying interests in new housing.
Who Counts as a First-Time Home Buyer?
Being a first-time buyer does not necessarily mean you have never owned a home at any point in your life.
For this rebate, you generally must be at least 18 years old and be either a Canadian citizen or permanent resident.
You must also meet the government’s first-time home buyer conditions relating to whether you owned and lived in another home during the relevant previous calendar years.
A spouse or common-law partner’s home ownership can also affect eligibility.
Do not assume you qualify or do not qualify based simply on whether you have ever owned property. CRA has specific rules for determining first-time home buyer status for this rebate.
The Home Must Be Your Primary Residence
The rebate is intended to help first-time buyers acquire a home to live in.
The qualifying home generally must become the primary place of residence of the buyer or an eligible relation.
That means the program is not simply a $50,000 rebate for purchasing a new investment property.
What Could the Rebate Look Like?
Consider a qualifying newly built home priced at $800,000 before applicable GST.
Five percent GST on $800,000 is $40,000.
If the buyer and property meet all the requirements for the new first-time buyer rebate, the federal rebate could potentially recover that $40,000.
New home price: $800,000
5% federal GST: $40,000
Potential FTHB GST rebate: up to $40,000
The actual calculation can differ depending on the transaction, province, applicable taxes and how the purchase is structured.
What About a $1 Million New Home?
At $1 million, 5% federal GST equals $50,000.
That is why $50,000 is the maximum federal rebate available under the program.
Above $1 million, the rebate begins to phase out rather than continuing to increase.
What Happens Between $1 Million and $1.5 Million?
The rebate is gradually reduced as the value of the qualifying home rises above $1 million.
At $1.5 million, the first-time home buyer rebate is reduced to zero.
This phase-out is important for buyers shopping in higher-priced Canadian housing markets, where a relatively ordinary new home can exceed $1 million.
Can You Get This Rebate and Other Home Buyer Programs?
The federal government has several programs aimed at home buyers, and eligibility rules differ between them.
For example, qualifying buyers may also be able to use the Home Buyers’ Plan to withdraw money from an RRSP or use money accumulated in a First Home Savings Account.
Using one program does not automatically mean you qualify for another, so each program’s rules should be checked separately.
Do You Have to Apply?
Yes.
Unlike many CRA benefits that are calculated automatically from your tax return, the First-Time Home Buyers’ GST/HST Rebate has an application process.
CRA is now accepting applications for the rebate.
There is also a deadline. CRA says the time limit to apply is generally within two years of taking ownership or completing construction, depending on the situation.
Before You Buy, Check the Rules
A potential $50,000 rebate is large enough to affect the economics of buying a new home.
But buyers should not assume that every newly built property automatically qualifies.
The buyer, property, purchase agreement, construction dates and intended use of the home can all matter.
If the rebate is important to your purchase decision, verify your eligibility before relying on the money in your budget.
The Bottom Line
Canada’s new First-Time Home Buyers’ GST/HST Rebate can be worth as much as $50,000.
Eligible buyers can recover up to 100% of the federal GST on a qualifying new home valued at up to $1 million.
The rebate is reduced between $1 million and $1.5 million and eliminated at $1.5 million.
For someone considering a newly constructed home, this is a government program worth checking before signing a purchase agreement — not after the home is already bought.
Canada Revenue Agency — First-Time Home Buyers’ GST/HST Rebate
Canada Revenue Agency — First-Time Buyers Can Save More on New Homes
VIPNews explains Canadian government changes in plain English. This article provides general information and is not personal tax, legal, mortgage or financial advice.