The dream of homeownership just became significantly more attainable for first-time buyers across Canada. In a groundbreaking announcement, the federal government has unveiled a policy that will eliminate GST entirely for first-time homebuyers purchasing new or substantially renovated homes valued at $1 million or less—potentially saving you up to $50,000.

This isn't just another incremental adjustment. This is a transformative change that directly addresses one of the biggest barriers to homeownership: upfront costs. For qualifying buyers, this means more money in your pocket at closing, lower mortgage payments if the GST is rolled into financing, and a genuine pathway to owning your first home.

A Year of Positive Momentum

While the housing market has faced its share of challenges, the past 12 months have brought a series of meaningful policy changes designed to help Canadians—especially first-time buyers—achieve homeownership.

Spring 2024: Canada's Comprehensive Housing Plan

In April 2024, the federal government launched Canada's Housing Plan with an ambitious goal: unlock 3.87 million new homes by 2031. This wasn't just about building more units—it was a multi-faceted approach to addressing the housing crisis from every angle.

The plan included several measures that directly benefit homebuyers:

Enhanced Home Buyers' Plan: The withdrawal limit from RRSPs for down payments increased from $35,000 to $60,000 per person. For couples buying together, that's now up to $120,000 available to put toward your new home. Even better, the repayment grace period extended from two to five years, giving new homeowners breathing room as they settle into their mortgages.

30-Year Amortizations for First-Time Buyers: Budget 2024 introduced 30-year mortgage amortizations specifically for first-time buyers purchasing newly built homes. This change means lower monthly payments, making homeownership more manageable month-to-month.

Rental Housing Tax Relief: The government removed 100% of GST from new purpose-built rental housing and increased the capital cost allowance for rental properties from 4% to 10%. While this primarily benefits developers and landlords, increased rental supply helps stabilize the broader housing market and provides more options for those still building toward homeownership.

Addressing Supply and Infrastructure

Beyond helping individual buyers, the government invested heavily in creating the conditions for more homes to be built:

$6 billion Canada Housing Infrastructure Fund to accelerate construction of essential infrastructure
$15 billion in additional loans through the Apartment Construction Loan Program to build at least 30,000 new rental apartments
Public Lands for Homes initiative to unlock underused federal land for housing development
$1.5 billion Canada Rental Protection Fund to preserve affordable existing homes

The government also took steps to modernize how we build homes, introducing a Housing Design Catalogue with standardized, pre-approved designs to streamline construction, and providing $500 million in low-cost financing for apartments using innovative prefabricated building techniques.

Supporting Those Most in Need

Recognizing that housing affordability affects different Canadians in different ways, the plan included targeted support for vulnerable populations:

$4.3 billion Urban, Rural and Northern Indigenous Housing Strategy
$1.3 billion for Canada's Homeless Strategy
$1 billion additional funding for the Affordable Housing Fund
$1.5 billion Co-operative Housing Development Program launched to spark a new wave of co-op housing projects

Provincial Actions Join the Movement

The momentum hasn't been limited to federal initiatives. Provincial governments have also stepped up. Most recently, in October 2025, Ontario announced it would eliminate the provincial portion (8%) of HST for first-time homebuyers on homes up to $1 million, complementing the federal GST elimination. Combined with existing Ontario rebates and the federal GST relief, first-time buyers in Ontario could save up to $130,000 on a new home purchase.

The GST Game-Changer: What It Means for You

Now, let's return to the policy that's making headlines and changing calculations for thousands of prospective homebuyers across the country.

The Details

The federal government is eliminating GST for first-time homebuyers on new homes up to $1 million and reducing GST for homes between $1 million and $1.5 million. Here's how it works:

Full GST Elimination: On new homes valued at $1 million or less, eligible first-time buyers pay zero GST—that's a savings of up to $50,000.

Partial Rebate: For new homes valued between $1 million and $1.5 million, a partial rebate phases down as the price increases.

Timeline: The rebate is available if the agreement of purchase and sale is entered into on or after May 27, 2025 and before 2031, with construction beginning before 2031 and substantially completed before 2036.

Who Qualifies?

To be eligible, at least one purchaser must be a first-time homebuyer acquiring the home as their primary residence and be the first to occupy it. This applies to:

New homes purchased from builders
Owner-built homes
Purchases of shares in cooperative housing corporations where the co-op paid GST

The Real-World Impact

The Parliamentary Budget Officer estimates that eligible first-time homebuyers would save an average of $26,832 in sales tax, with 71,711 new builds qualifying for GST relief over the lifetime of the program.

Beyond the immediate savings, consider the ripple effects. When GST is rolled into the mortgage principal, typical owners could expect to save $240 per month on mortgage payments. Over the life of a mortgage, that's tens of thousands of dollars back in your pocket.

For many first-time buyers, that $50,000 in GST savings could be the difference between qualifying for a mortgage or not, between affording a home in the neighborhood they want or having to compromise, between staying in their community or moving away.

A Positive Direction Forward

After years of watching housing prices climb seemingly out of reach, these policy changes represent a genuine shift. The federal and provincial governments are using every tool at their disposal to make homeownership more accessible.

Yes, challenges remain. Supply constraints, interest rates, and regional market conditions all play a role in housing affordability. But the trajectory is clear: governments are listening, acting, and putting meaningful support in place for first-time buyers.

The elimination of GST on new homes for first-time buyers isn't just a tax policy—it's an investment in a generation of Canadians who feared homeownership would always be out of reach. It's recognition that everyone deserves a fair shot at building equity, stability, and a future in their own home.

If you've been watching from the sidelines, wondering if homeownership would ever be possible, now is the time to take action. The policies are in place. The savings are real. The dream is within reach.

Ready to Take the Next Step?

Whether you're just starting to think about buying your first home, actively house-hunting, or wondering how these new policies apply to your specific situation, our team is here to help you navigate every step of the journey.

From understanding how much you can afford with the new GST savings to finding the perfect new build that qualifies for the rebate, we're committed to turning your homeownership dreams into reality.

Contact our team today to discuss your home buying needs and discover how these game-changing policies can work for you. Let's explore your options together and create a plan that gets you the keys to your first home.

The time to act is now—and we're here to make it happen.

A Game-Changer for First-Time Homebuyers: No GST on New Homes Under $1 Million