Last month the Ontario government announced plans to remove the Harmonized Sales Tax (HST) on new homes for one year, touting it as a measure that would “help families realize the dream of homeownership” and spur more home construction.
The full tax rebate, which is included in the 2026 budget, would apply to buyers of eligible new homes valued up to $1 million. This would go beyond the tax rebate the province introduced last fall, which was only for first-time home buyers and only on the provincial portion of HST.
However, because the budget has yet to pass (it was just ordered for a third and final reading Tuesday), specific guidance is not yet available. To get an understanding of what we do know about the rebate, CBC News spoke with real estate experts on how it could work and what it means for buyers.
Here’s what you need to know:
Can I get this rebate now?
Not until the budget gets passed.
It is possible that details about the rebate and how it will roll out could change as the budget goes through the legislature.
There’s also another caveat: federal legislation. Since this rebate would remove the full 13% HST on eligible homes, 5% of the HST comes from the federal government, and 8% from the province.
That means there has to be changes both federally and provincially to implement the rebate.
Ontario is partnering with the federal government to remove sales tax for buyers of new homes valued under $1 million. Ontarians can get up to $130,000 in rebates for just one year, Ontario Housing Minister Rob Flack tells Power & Politics.
Benoit Mayrand, a spokesperson with the Department of Finance Canada, said the federal government is working on introducing a legislative change to account for the incoming HST rebate, with a new bill introduced last month.
“Subject to passage, [the bill] would immediately provide $1.7 billion to provinces and territories to implement measures to increase Canada’s housing supply,” he said in a written statement.
Mayrand said that Ontario has decided to use its allocation of the announced funding to implement the HST rebate, saying discussion about its implementation is “ongoing.”
“As a result, we cannot speculate on potential timelines at this time,” he said.
I’m looking to enter the housing market. Will this help?
Some real estate experts say the rebate will be more of a bail-out for builders, not buyers.
If the rebate only lasts for one year, it can give a “massive” bail-out to developers who have existing housing stock, said Mark Morris, a Toronto real estate lawyer.
“All you’re really doing is allowing existing builders who have existing product to unload inventory,” he said.
However, Morris also said the incentive can “reset” the market to benefit buyers, because if brand new builds — which are more desirable than older homes — are selling for less, the resale market will have to adjust its price points too.
Updated numbers show the Ontario government once again failed to meet its goal for housing starts, even with new ways of counting them. CBC’s Lorenda Reddekopp has the details — and reaction.
Looking at buying pre-build? Read this part
Justin Sherwood, the chief operating officer for the Building Industry and Land Development Association (BILD), said most new homes are bought as pre-construction sales, and if an agreement of purchase and sale is made within the one-year HST rebate period, the rebate will apply even if construction ends later.
According to the Ontario government’s backgrounder on the rebate, if you plan to a buy a new home that isn’t built yet, you will get the rebate based on the following conditions:
- You sign an agreement of purchase and sale for the home within the HST rebate window, which is from April 1, 2026 to March 31, 2027.
- Construction begins on or before Dec. 31, 2028, and “the home is substantially completed” on or before Dec. 31, 2031.
Requirements do differ depending on the type of home, so it’s best to check with provincial guidelines and an agent.
How will I know if the rebate saves me money?
You’ll have to do the math on where you can save the most, says John Pasalis, a realtor and broker with Realosophy Realty.
“[Buyers] might find that even with the tax cut, it doesn’t make sense,” he said.
Pasalis referenced the condo market as an example where the benefit may be lost on buyers, because there is a big gap between what a resale condo costs and what a new condo build costs.
“Even with a big tax cut, it costs way more to buy a pre-construction condo than an existing condo,” he said.
“Why am I going to pay $800,000 for a pre-construction condo when I can get a very similar unit for $650,000 today?”
However, when it comes to other types of housing — think townhomes, semi-detached or detached homes — Pasalis said it could make sense.
“The only way is to just go to a new housing sales office and see what they’re selling, and at what price,” he said.
Shaun Cathcart, senior economist at the Canadian Real Estate Association, says the ‘missing middle’ remains a major problem in Canada’s housing market.
How do I get the rebate?
Because the budget hasn’t passed, there is no “discernible” guidance yet on how the rebate would be given out, said Morris.
One possibility could include the builder claiming the rebate and taking it out of the cost of the home, meaning the buyer won’t have to pay for it in the first place or deal with any paperwork related to it.
Another option could place the onus on the buyer to fill out an application to get the rebate through the Canadian Revenue Agency.
Ontario’s Ministry of Finance did not respond to multiple requests for comment about the rebate and when updated guidance will be made available.
Where can I find listings for rebate-eligible homes?
You’ll likely have to go through a real estate agent/broker.
That’s because the HST doesn’t apply to resale homes, which are the properties listed on websites like Realtor.
“There is no publicly available ability to look up new build products … you usually have to use an agent,” said Morris.
