GST relief on new homes could save 1st-time buyers up to $240 on mortgages

Canada’s plan to waive the GST (goods and services tax) on new homes could mean real savings for first-time buyers. A new analysis shows that by removing this tax, the government could help reduce monthly mortgage payments by up to $240 for new homebuyers who roll the GST into their mortgage. This gives a small but meaningful boost to people trying to break into the housing market.

The idea comes from a recent report that looked at how this tax change could impact buyers. If developers build new homes and include the GST in the mortgage, homeowners would benefit from lower monthly payments thanks to reduced interest costs. For first-time buyers already stretched thin, this kind of support could make a difference.

Another analysis from government officials estimates that first-time buyers could save up to $26,800 over the life of their mortgage. This is based on a full GST rebate of up to $50,000 on new homes priced under $1 million. The rebate amount drops gradually for homes priced up to $1.5 million and disappears altogether for homes priced above that.

The government expects to lose about $1.9 billion in GST revenue over six years if the rebate plan goes ahead. This is less than earlier estimates, mainly because of different assumptions about how many people will use the rebate and how many homes will qualify.

Experts say the real benefit is in monthly savings. If the GST is added into a mortgage, buyers could save about $240 each month. Even if the GST is paid up front, the rebate would reduce how much cash buyers need at closing. Either way, it helps ease the pressure a bit.

However, the plan hasn’t been passed into law yet. It still needs to go through Parliament before it can take effect. If approved, the measure could make new homes more attractive to first-time buyers and possibly boost new construction—but it could also push demand higher, which might affect prices.