Ontario's home affordability has been at a crisis point, especially for first-time homebuyers looking to enter the market.
A new proposal by the Ontario Provincial Government could mark a significant turning point in your journey to homeownership. The Ontario government just announced a proposed tax relief program that could save you up to $130,000 on your first home purchase.
Here's everything you need to know about this proposed HST rebate and how it could help you finally get the keys to your own place.
Important: This rebate is currently a proposal that will be included in Ontario's Fall Economic Statement on November 6, 2025. Implementation depends on both provincial approval and federal legislation passing.
What's the Proposal?
Ontario is proposing to eliminate the full 8% provincial portion of the Harmonized Sales Tax (HST) for first-time home buyers purchasing newly built homes valued up to $1 million. When combined with the federal government's proposed 5% GST removal, eligible buyers could see total savings of up to $130,000 if both measures are approved and implemented. This is a significant move to improve affordability and can have a significant impact for both first time homebuyers, and revising the pre-construction market that has been struggling in the face of declining demand.
Key Numbers (if approved):
- Provincial savings: Up to $80,000 (including existing Ontario HST New Housing Rebate)
- Federal savings: Up to $50,000
- Total potential savings: Up to $130,000
Timeline: The proposal will be included in the 2025 Fall Economic Statement on November 6, 2025.
Why This Matters: The Housing Affordability Crisis
Let's be honest: buying your first home in Ontario has become increasingly difficult. The average home price in Toronto now sits at $1.1 million, and even outside the GTA, homes regularly cost between $800,000 and $900,000. For young professionals and families, these numbers feel insurmountable.
To understand your home buying journey and all the costs involved, it's important to factor in not just the purchase price, but all the associated taxes and fees that add up quickly.
How the Proposed Ontario HST Rebate Would Work
Eligibility Requirements (As Proposed)
If approved, you would need to meet these criteria to qualify for the full provincial rebate:
- First-time home buyer status: You cannot have owned a home in the past
- Home type: New construction or substantially renovated homes
- Home value: Up to $1 million for full rebate
- Primary residence: The home must be your primary place of residence
- Purchase timeline: Agreement of purchase signed on or after May 27, 2025
- Construction deadline: Construction must begin before 2031 and be substantially completed before 2036
Proposed Rebate Amounts by Price Point
- Homes up to $1 million: Full 8% provincial HST rebate
- Homes $1 million to $1.5 million: Graduated rebate (phased reduction)
- Homes $1.35 million to $1.5 million: Minimum $24,000 relief
- Homes over $1.5 million: Not eligible
Understanding the land transfer tax and other closing costs is crucial when budgeting for your home purchase, as these proposed HST savings will stack with other existing rebates.
Potential Savings: What This Could Mean for You
Let's break down what these savings could actually look like if the proposal is approved:
Example 1: $800,000 New Condo in Mississauga
Current situation (without the rebate):
- Purchase price: $800,000
- HST (13%): $104,000
- Total cost: $904,000
If the proposed rebate is approved:
- Purchase price: $800,000
- HST savings: $104,000 (full 13% rebated)
- Total cost: $800,000
- Your potential savings: $104,000
Example 2: $1 Million New Townhouse in Ottawa
Current situation (without the rebate):
- Purchase price: $1,000,000
- HST (13%): $130,000
- Total cost: $1,130,000
If the proposed rebate is approved:
- Purchase price: $1,000,000
- HST savings: $130,000
- Total cost: $1,000,000
- Your potential savings: $130,000
For many first-time buyers, these savings could represent years of additional saving they no longer need to do, or a more comfortable down payment that reduces their mortgage burden.
The Federal Connection: Why You Need Bill C-4 to Pass
Here's something crucial to understand: Ontario's rebate depends on federal legislation passing. The federal government proposed its 5% GST removal back in May 2025 as part of Bill C-4, but the provincial rebate cannot be implemented until this federal legislation receives royal assent and the necessary regulatory changes are made.
Ontario Finance Minister Peter Bethlenfalvy emphasized this urgency: "In the face of tariffs and global economic uncertainty, it's never been more important to make life more affordable for the hardworking people of Ontario."
Other First-Time Home Buyer Programs in Ontario (2025)
The new HST rebate isn't the only tool in your homebuying arsenal. Here's what else is available:
First Home Savings Account (FHSA)
- Save up to $40,000 tax-free ($8,000 annually)
- Contributions are tax-deductible
- Withdrawals for home purchase are tax-free
- Must be used within 15 years
Home Buyers' Plan (HBP)
- Withdraw up to $60,000 from your RRSP tax-free
- Must be repaid over 15 years
- Couples can access up to $120,000 combined
Land Transfer Tax Rebates
- Ontario: Up to $4,000 rebate for first-time buyers
- Toronto: Additional municipal rebate of up to $4,475
- Total potential relief in Toronto: $8,475
First-Time Home Buyers' Tax Credit
- Federal tax credit worth $1,500
- Helps offset closing costs
- No strings attached
Extended Amortization Periods
- 30-year amortization now available (up from 25 years)
- Lowers monthly mortgage payments
- Available for first-time buyers and new construction
- Insured mortgage cap increased from $1 million to $1.5 million
What This Means for the Housing Market
The Ontario government hopes this rebate will serve multiple purposes:
- Boost new home construction: By making new builds more affordable, developers may see increased demand
- Keep workers employed: Construction jobs remain strong when building activity increases
- Economic stimulus: Housing construction has ripple effects throughout the economy
- Reduce costs during uncertainty: With tariff threats and global economic volatility, the government is positioning this as economic protection
The initiative builds on Ontario's existing housing investments, including $4 billion through the Municipal Housing Infrastructure Program and $1.2 billion through the Building Faster Fund.
Frequently Asked Questions
Q: When does the Ontario HST rebate start?
A: The rebate applies to purchase agreements signed on or after May 27, 2025, but implementation depends on federal legislation passing.
Q: Can I combine this rebate with other programs?
A: Yes! You can use the HST rebate alongside the FHSA, HBP, land transfer tax rebates, and other first-time buyer benefits.
Q: What if I'm buying a resale home?
A: Unfortunately, this rebate only applies to newly built or substantially renovated homes, not existing resale properties.
Q: Does a condo count as a newly built home?
A: Yes, new condominiums qualify as long as they meet the other eligibility criteria.
Q: What does "substantially renovated" mean?
A: Generally, this means at least 90% of the interior has been removed or replaced. Specific CRA definitions apply.
Q: I'm buying with my partner. Can we both be first-time buyers?
A: At least one person on the title must be a first-time home buyer, but both can benefit from the rebate.
Q: How do I claim the rebate?
A: Your builder or lawyer will typically handle the rebate application as part of the closing process. The rebate is applied at the time of purchase.
This article is for informational purposes only and should not be considered financial or legal advice. Consult with qualified professionals before making real estate decisions.
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