First‑Time Home Buyer GST Rebate

Buying your first home is exciting — and expensive. Fortunately, the federal government recently introduced a new GST rebate program designed specifically to help first‑time buyers who are purchasing brand‑new homes or substantially renovated homes in Canada. This rebate can make a big difference in how much you pay overall, especially in markets like Edmonton and across Alberta. Canada.ca

Here’s what you need to know.

The Government of Canada has proposed legislation to eliminate the GST for first-time home buyers on new homes valued up to $1 million, and reduce it for homes between $1 million and $1.5 million. While the rebate could offer up to $50,000 in savings, applications are still pending final approval and rollout. [canada.ca] 

If the proposed legislation receives Royal Assent, a first-time home buyer may be eligible for the FTHB GST/HST rebate in addition to the existing GST/HST new housing rebate. Where both rebates apply, the GST/HST FTHB rebate would act as a top up to the existing GST/HST new housing rebate.

What Is the First‑Time Home Buyer GST Rebate?

When you buy a newly constructed home in Canada, you normally pay a federal Goods and Services Tax (GST) of 5 % on the purchase price. The new First‑Time Home Buyer (FTHB) GST Rebate allows eligible buyers to recover some — or in many cases all — of that GST back, making homeownership more affordable.

Instead of paying the full 5 % tax, this rebate can reduce or even eliminate that cost for first‑time buyers on eligible new homes.

How Much Can You Save?

The amount you could recover depends on the value of your new home:

• 🏡 Homes up to $1 million — you may be eligible for a 100 % rebate of the GST you paid (up to a maximum of about $50,000).
• 💡 Homes between $1 million and $1.5 million — the rebate is gradually reduced (for example, a home at $1.25 million might qualify for about half the full rebate).
• 🚫 Homes $1.5 million and above — no rebate amount is available.

That means for many buyers of typical new‑build family homes, the rebate can be a significant savings at closing — dollars that might otherwise go toward other moving or life expenses.

Who Qualifies for the Rebate?

To be eligible for this GST rebate:

• You must be a first‑time home buyer — meaning neither you nor your spouse/common‑law partner has owned a home you lived in as your primary residence before (with specific look‑back rules).
• The home must be newly built or substantially renovated, or you are building it yourself.
• It must be your primary residence, not an investment property or vacation home.
• The purchase agreement needs to have been entered into on or after May 27, 2025 (when the program was introduced).

These criteria help ensure the rebate supports people entering the housing market for the first time, not people flipping homes or buying non‑primary residences.

How Does It Work in Practice?

Most buyers still pay the GST at closing, and then apply for the rebate through the appropriate form (often with assistance from their builder or accountant). In some cases, builders might apply the rebate upfront at closing, reducing your purchase price directly — but that depends on the builder and your agreement.

The key takeaway? Whether you get the rebate after closing or at closing, it lowers your net cost and can free up cash for other things like furnishing your home, moving expenses, or future renovations.

Why This Matters for First‑Time Buyers

For many first‑time buyers, saving up for a down payment is already a major challenge. The GST rebate adds another layer of affordability by reducing the tax cost — potentially saving tens of thousands of dollars.

This rebate doesn’t replace other first‑time buyer incentives (like the Home Buyers’ Plan or tax credits), but it adds to them, giving new buyers more breathing room financially.

Tips for Getting the Most from the Rebate

Here are a few things to keep in mind:

✅ Work with a builder or agent who understands the rebate rules — they can help you figure out whether your purchase qualifies and how the rebate can be applied.
✅ Review your purchase agreement carefully — eligibility often depends on when it was signed and what kind of property is being purchased.
✅ Plan your budget knowing the rebate amount — knowing how much you can recover can help you make smarter decisions about price ranges and communities.

In Summary

Canada’s new First‑Time Home Buyer GST Rebate creates a major financial opportunity for people entering the housing market. By reducing or eliminating GST on qualifying new homes up to $1 million (and partially for homes up to $1.5 million), this program can help make homeownership more affordable and accessible — particularly in high‑growth areas where prices are rising.

If you’re thinking about buying your first home, especially a brand‑new one, understanding and planning for the GST rebate can be a smart part of your overall strategy.