Ontario and the federal government are moving forward with a major enhancement to the GST/HST rebate program aimed at lowering the cost of newly built homes and stimulating housing construction across the province. The initiative is designed to improve affordability for buyers, encourage new housing development, and support Canada’s overall housing supply strategy.

The proposed program would provide up to 13% HST relief on qualifying new homes through a combination of:

• The 8% Ontario provincial portion of the HST
• The 5% federal GST portion

For qualifying homes priced up to $1 million, buyers could receive a full rebate of the HST, representing savings of up to $130,000. Homes priced between $1 million and $1.5 million would receive a reduced rebate on a sliding scale. According to background information released by MNP and government sources, homes priced between $1.5 million and $1.85 million may still qualify for a reduced rebate ranging from approximately $130,000 down to $24,000, while homes above $1.85 million may continue to qualify for Ontario’s existing rebate of approximately $24,000.

The enhanced rebate program is intended to apply to:

• Newly constructed homes
• Substantially renovated homes
• Owner-built homes
• Mobile and modular homes
• Certain co-operative housing purchases
• Certain residential rental properties

The program is generally expected to follow the same eligibility framework as the existing:

• New Housing Rebate (NHR)
• New Residential Rental Property Rebate (NRRPR)

In most cases, the home must be intended as the purchaser’s primary place of residence, although Ontario’s proposed framework appears broader than the federal first-time buyer program and may also extend relief to qualifying rental housing projects.

Ontario’s portion of the rebate has already advanced legislatively through Bill 114, which received Royal Assent on May 12, 2026. The federal government has also introduced supporting legislation through Bill C-26, which includes approximately $1.7 billion in funding to provinces and territories to support housing supply initiatives across Canada.

The Canada Revenue Agency (CRA) is expected to administer the provincial rebate program, while additional regulations are still being finalized for both the provincial and federal components. The 8% Ontario portion has already been legislated, while the 5% federal component still requires amendments to the federal Excise Tax Act and related regulations before full implementation is complete.

Current guidance suggests that:

• Ontario’s enhanced rebate program would apply to Agreements of Purchase and Sale signed between April 1, 2026 and March 31, 2027
• The federal first-time buyer rebate applies to agreements signed on or after March 20, 2025

Government sources have emphasized that the Agreement of Purchase and Sale date — not the closing date — determines eligibility.

The federal government has separately confirmed a new federal First-Time Home Buyers’ GST/HST Rebate program, which would provide:

• A full rebate of the 5% federal GST on new homes up to $1 million
• A partial rebate on homes priced between $1 million and $1.5 million
• Maximum federal savings of up to $50,000

Unlike the federal program, Ontario’s proposed rebate appears broader and may not be restricted exclusively to first-time buyers, potentially making it beneficial for move-up buyers, downsizers, and some investors purchasing qualifying residential rental properties.

Another important feature under discussion is the possibility for builders to apply rebate savings directly at closing, reducing buyers’ upfront purchase costs instead of requiring purchasers to apply later for reimbursement from the CRA. Administrative procedures for this process are still being finalized.

Ontario estimates the combined partnership with the federal government could deliver approximately $2.2 billion in housing-related tax relief, helping reduce purchase costs, improve affordability, support construction jobs, and encourage additional housing supply during a period of elevated housing costs and slower new-home sales activity.

While the announcement has been widely welcomed within the real estate and development industries, several implementation details remain subject to final provincial and federal regulations. Buyers, builders, and investors are encouraged to continue monitoring updates from the Ontario Ministry of Finance and the Canada Revenue Agency as additional guidance becomes available.

Click here for more information.