Imagine signing the agreement on your first new home, budgeting for a $50,000 tax rebate — and then finding out you don't qualify.
It's not hypothetical. Canadian home buyers who agreed to purchase a newly constructed home between March 20, 2025 and May 26, 2025, are not eligible for the First-Time Home Buyers’ (FTHB) GST Rebate.This new federal home buying rebate was announced on March 20, 2025 but wasn’t introduced into law until May 27, 2025 — two months later (1). Anyone who signed a purchase agreement to in those two months are not eligible for the rebate. That’s a loss of up to $50,000 (or $130,000 if you live in Ontario), a serious chunk of change.
What buyers of new builds can now expect to get back
The FTHB GST Rebate provides eligible first-time home buyers with a full or partial refund of the GST — or the federal part of the HST — on newly constructed or substantially renovated homes.
For new homes valued up to $1 million, the rebate covers up to 100% of the maximum GST paid, up to $50,000. If the new home is valued between $1 million and $1.5 million, the maximum rebate is gradually reduced. There is no rebate for homes valued at $1.5 million or more.
Ontario new build buyers can expect even more
If you bought a new build in Ontario after May 26, 2025, you’re not only eligible for the federal FTHB GST rebate, but the provincial government will also reimburse the full 8% provincial portion of the HST (2). Like the federal rebate, the province will gradually phase out the rebate for new builds between $1 million and $1.5 million.
Buyers who are eligible for the Ontario and the federal rebates can qualify for up to $130,000 in total savings.
For many, this rebate is the equivalent of years' worth of savings — or the difference between carrying mortgage insurance and not.
The date that determines everything
The single most consequential detail in this rebate is a date: May 27, 2025.
The FTHB GST Rebate is only available if the agreement of purchase and sale is entered into with the builder after May 26, 2025.
There are specific rules that apply when an agreement is assigned or terminated — including to purchase a different property from the same builder — making it unlikely for first-time buyers to qualify if they had previously entered into an agreement before that critical May 2025 date.And the protection against workarounds is strict.
If an agreement of purchase and sale was originally entered into before May 27, 2025, and is subsequently cancelled, and a new agreement is entered into — or the agreement is varied or altered — the rebate may be disallowed in respect of the new home under the new agreement.
In other words: tearing up a pre-May 27 contract and signing a new one is unlikely to unlock eligibility, and could trigger additional tax headaches for builders in the process.
Who actually qualifies — and who doesn't
Who actually qualifies boils down to the definition used by the federal and provincial governments regarding "first-time home buyer" — and it’s stricter than the name suggests.
To qualify, you must:
- Be at least 18 years old
- A Canadian citizen or permanent resident
- Never lived in a home that you or your spouse or common-law partner owned as a primary residence in the calendar year of the purchase or in any of the previous four calendar years
- Each individual can claim the rebate only once in their lifetime, and a buyer is not eligible if their spouse or common-law partner has already claimed it
And it’s the four-year look back that catches a lot of people off guard.
To illustrate, let’s assume a buyer sells their home in 2022 and spends the next three years renting before buying another home in early 2026. Under the four-year look back rule, this buyer wouldn’t qualify as a first-time buyer, as the year 2022 still falls within the four-year window.
Plus, any home purchased by a buyer must be used as their principal residence and either be a new-build construction or substantially renovated. To qualify as a substantial renovation, generally 90% or more of the interior of the existing housing must be removed or replaced.
What happens if you took possession before the law passed?
Buyers who signed their agreement after May 27, 2025, but took possession before the legislation received Royal Assent on March 12, 2026, face an extra step — but can still claim the rebate.
In those cases, the buyer must pay the full GST/HST to the builder at closing, then apply directly to the CRA for the rebate. Builders cannot credit the new rebate at closing for homes where ownership transferred before Royal Assent on March 12, 2026 (3).
There is also a time limit — generally two years from taking ownership or finishing construction — to apply. Missing that window means forfeiting the rebate entirely.
What to verify before you sign
If you're considering a newly built home, confirm the following before committing:
- Your agreement of purchase and sale is dated on or after May 27, 2025
- Neither you nor your partner has owned a primary residence in the current year or the previous four calendar years
- The home is newly constructed or substantially renovated — not a resale property
- The home will be your primary place of residence, and you will be its first occupant
- You are a Canadian citizen or permanent resident, aged 18 or older
- You have not previously claimed this rebateIf you're buying in Ontario, confirm your builder and real estate lawyer understand the provincial rebate application process. The Ontario rebate requires coordination with the federal claim and is subject to the passage of its own enabling legislation.
The rebate is one of the largest direct tax breaks for first-time buyers, and the measure is expected to deliver $3.9 billion in tax savings to Canadians over five years, starting in 2025/2026. But those savings only flow to buyers who meet every condition and who apply before the clock runs out.
The Canada Revenue Agency (CRA) is now accepting applications for the new FTHB GST/HST rebate. The savings are real and significant — but so are the ways to miss out on this money back (4).
For more information about details on these topics, feel free to contact me anytime at 647-701-1486 or email me at info@homesbyic.com
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial, investment, or tax advice. While we strive to provide accurate information, tax laws are subject to change and vary by jurisdiction. You should consult with a qualified CPA, tax attorney, or financial advisor before making any decisions based on the content of this blog. Inder Chawla Real Estate Inc. is not responsible for any financial losses or tax penalties incurred.