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Ottawa’s GST rebate on new homes would save typical first-time buyer $27K: PBO

Ottawa’s GST rebate on new homes would save typical first-time buyer $27K: PBO

An analysis by the Parliamentary Budget Officer (PBO) shows that Ottawa’s proposed GST rebate for new homes could bring significant savings to first-time buyers. For a typical qualifying buyer, the rebates would amount to about $26,832—roughly $27,000 in tax relief on a newly built home. This initiative is part of Bill C-4, aimed at easing the cost barriers for first-time homeownership.

Under the plan, first-time buyers would receive back 100 per cent of the GST paid on a new home up to $1 million in value. For homes priced above that, up to $1.5 million, the rebate would be phased out gradually and unavailable beyond that price point. In short, a home costing $1 million would earn the full rebate; at the $1.25 million midpoint, the rebate would be halved; and no rebate would apply to homes at $1.5 million or more.

The PBO forecasts the rebate program would cover around 71,700 homes sold to first-time buyers over six years. Its estimated cost to the federal treasury is $1.9 billion over that period. This figure is notably lower than the federal government’s earlier estimate, which put the price tag closer to $3.9 billion over five years. The lower PBO figure reflects more conservative assumptions, including a later start date and a stricter definition of who qualifies as a first-time buyer.

Eligible purchases would need to happen after May 27, 2025, and construction must begin before 2031, with the home substantially completed by 2036. Only individuals buying their very first home—who have not owned property themselves or with a spouse or common-law partner in the past few years—would be eligible.

Some experts have raised concerns about how much this rebate could help expand the supply of affordable housing. One analysis points out that the benefit would apply to just 5 per cent of new homes each year—around 13,000 units annually—far too few to significantly boost housing availability. They argue that extending the rebate to all owner-occupiers, not just first-time buyers, could boost impact and still be fiscally manageable.

Still, for many first-time homebuyers, the rebate represents a real bite out of their costs—averaging $27,000 in savings on taxes. In some cases, this could reduce monthly mortgage payments by around $240, especially if the GST is financed as part of the mortgage, though the most direct savings come when the rebate is applied immediately on purchase.