Over 71,000 new homes may qualify for GST relief
Canada’s proposal to eliminate the federal goods and services tax (GST) on select new home purchases will see an average of $26,832 in savings for the typical first-time buyer, according to a new report from the Parliamentary Budget Officer (PBO).
The measure, unveiled during the election campaign by the Liberals and tabled in Parliament, is also projected to cost significantly less than initially forecasted by the federal government.
The PBO estimates that the rebate program—intended for eligible first-time homebuyers purchasing new builds priced up to C$1 million—will result in C$1.9 billion in foregone revenue over six years. This figure falls short of the C$3.9 billion five-year cost previously outlined by federal officials when the measure was introduced in May.
Roughly 71,700 newly constructed homes are expected to qualify for the GST relief, which offers a maximum rebate of C$50,000. The rebate phases out gradually for homes priced between C$1 million and C$1.5 million, becoming unavailable for homes priced above that range.
Purchases made from May 27 through 2031 are eligible, provided construction begins before the 2031 deadline and is completed by 2036.
The PBO attributes the gap in projections to differences in timing and eligibility definitions, including a narrower classification of first-time homebuyers. In contrast, the federal estimate appears to assume wider program uptake.
Questions remain regarding how the government arrived at its projections. Finance minister François-Philippe Champagne did not respond to inquiries when approached by reporters following a caucus meeting, and his office has not issued a clarification. Housing Minister Gregor Robertson, also asked for comment, said questions would be addressed at a later time.
Only individuals purchasing their first home are eligible for the rebate. Previous homeowners and investors are excluded.
Desjardins Economics published its own assessment of the proposal earlier this week, suggesting the higher federal estimate may reflect expectations of broader buyer participation.
Economist Kari Norman wrote that the measure could lead to increased construction activity if demand from first-time homebuyers rises as anticipated. Norman estimates that 85% of newly built homes during the program period will qualify for the full GST break.
For buyers who finance the GST portion through a mortgage, this could translate to C$240 in monthly savings. Where developers charge the GST upfront, the rebate would provide a direct reduction in out-of-pocket costs.
The GST measure, still subject to legislative approval, is packaged with a planned federal income tax adjustment scheduled to take effect on July 1. While the PBO’s estimate does not account for market behaviour shifts, Norman notes that additional demand from first-time buyers could place upward pressure on home prices in the near term.
