By OptiVal Editorial Desk
Buy a brand new home in Canada and the tax bill at closing can sting. On an $850,000 house, the 5 per cent GST alone is $42,500, before land transfer tax and legal fees. The new first-time home buyer GST rebate in Canada can give that entire $42,500 back. It is the biggest change to new housing rebates in years, and a lot of buyers still price their purchase as if it does not exist.
The rebate became law under Bill C-4, which received royal assent in March 2026. The Canada Revenue Agency (CRA) explains the rules in Guide RC4028, GST/HST New Housing Rebate. Here is what it pays, who qualifies, and how to claim it in time.
What the first-time home buyer GST rebate in Canada actually pays
The rebate covers the GST, or the federal part of the HST, on a new or substantially renovated home. It works together with the older GST/HST new housing rebate, and together they can return 100 per cent of the federal tax.
The math, in plain terms:
- Home priced at $1 million or less: 100 per cent of the federal tax back, to a maximum of $50,000.
- Home priced between $1 million and $1.5 million: the rebate shrinks on a straight line. At $1.25 million, the rebate is $25,000.
- Home priced at $1.5 million or more: no rebate.
Three worked examples show the scale. On a $400,000 new condo, the GST is $20,000, and an eligible first-time buyer can recover the full $20,000. On an $850,000 house, the GST is $42,500, and the full $42,500 comes back. On a $1.25 million house, the GST is $62,500, but the phase out and the $50,000 cap cut the rebate to $25,000.
Compare that with the old rebate on its own. The long standing GST/HST new housing rebate returns only 36 per cent of the federal tax, capped at $6,300, shrinking after $350,000 and disappearing at $450,000. For most new Greater Toronto Area homes, it was already zero.
One limit matters in HST provinces: this rebate covers only the 5 per cent federal part. Ontario buyers may also qualify for a separate Ontario first-time home buyer rebate on the 8 per cent provincial part, up to $80,000, under the same basic conditions. Check the CRA guide for your province before you count on that money.
Who counts as a first-time home buyer
First-time does not mean you have never owned anything, anywhere, ever. The CRA test is specific. Generally, you must:
- Be at least 18 years old and a Canadian citizen or permanent resident.
- Not have lived, in the calendar year of purchase or in any of the four previous calendar years, in a home that you or your spouse or common-law partner owned and used as a primary place of residence, whether that home was in Canada or outside it.
- Buy or build the home for use as your own primary place of residence, and be the first person to live in it after the work is substantially complete.
- Be an individual. Corporations and partnerships cannot claim this rebate.
- Not have claimed, or been treated as having claimed, this rebate before. It is a one time claim.
The four year rule catches people out. If your spouse owned a home three years ago and you lived there, you may not qualify, even if your name was never on title. In a joint purchase, at least one buyer must be a qualifying first-time buyer who will live in the home and be the first to occupy it. That buyer is the claimant.
Resale homes and rental properties do not qualify. If you plan to rent the home out, look at the separate new residential rental property rebate instead, and read our guide to GST/HST place of supply rules in Canada if you charge tax across provinces.
The dates that decide whether you qualify
Timing is where claims fail. For a builder purchase, the written agreement must be entered into on or after March 20, 2025 and before 2031. Construction must begin before 2031 and be substantially completed before 2036. Owner-built homes use the same start and completion dates.
Watch the assignment trap. If the original agreement was signed before March 20, 2025, a later change or assignment does not make the home eligible. Cancelling an old agreement and signing a new one mainly to get the rebate fails too.
Substantially renovated counts, but the bar is high: 90 per cent or more of the interior generally has to be removed or replaced. A kitchen remodel will not meet that test.
How to claim it, and the two year deadline
Most builder buyers never file on their own. The builder can credit the rebate against the price at closing, then claim it back from the CRA. You still sign the application, so confirm the credit is actually on the statement of adjustments, in dollars, before you close.
If the builder does not credit it, you apply directly. For a builder purchase, use Form GST190 with worksheet RC7190-WS. For an owner-built home, use Form GST191 with worksheet GST191-WS, filed online through CRA My Account if you prefer. Keep original invoices for six years. Estimates are not proof, and claims are subject to audit.
The deadline is firm: generally two years. For a builder purchase, count from the date ownership transfers to you. For an owner-built home, count from your base date, tied to first occupancy and substantial completion in Guide RC4028. Miss the window and the rebate is gone, even if you closed before the law was in place and got no credit at closing.
A practical closing checklist:
- Confirm in writing whether the price is plus GST/HST or net of rebates, and who is claiming each rebate.
- Check your four year history, including a spouse or partner, before you sign, not after.
- Diarise the two year filing date on closing day, even if the builder credited the rebate.
- Keep the signed agreement and the statement of adjustments. Builders claiming on Type 1A or 1B applications now have to include both with the claim.
Where this fits for owners and builders
For a first-time buyer, a $42,500 credit on an $850,000 home is not a rounding error. For builders, it adds paperwork risk: a builder who credits a rebate to an ineligible buyer can be jointly liable with the buyer to repay it.
Getting the GST/HST side right at signing is much cheaper than fixing it after closing. OptiVal helps owners and small builders with HST filings and rebate paperwork, with HST returns from $99 per quarter and bookkeeping from $199 per month. Led by qualified professionals with more than 75 years of combined experience, PwC-trained and with team members who have worked at world-leading multinationals in CFO-level positions, we keep the tax side plain and on time. See our services and pricing, then book a free consultation for a second set of eyes on a purchase agreement before you sign.
