Ontario’s government is proposing a major update that could make it more affordable for first-time homebuyers to purchase a new home.
As part of its 2025 Fall Economic Statement, the province is proposing to rebate the full provincial portion (8%) of the HST on new homes priced up to $1 million, a move that would lower purchase costs for consumers and boost the construction of more homes, the government says.
When combined with the federal government’s proposed removal of its 5% portion of the HST, this could lead to significant savings.
What first-time buyers could save:
- Up to $80,000 from Ontario’s proposed full 8% HST rebate on homes priced up to $1 million
- Up to $50,000 from the federal government’s proposed 5% HST rebate
- Total potential savings: up to $130,000 for qualifying first-time homebuyers
Details of the new rebate
The federal government first announced its proposal to remove the full 5% federal portion of the HST on May 27, 2025. Ontario’s new rebate is designed to align with that federal plan. However, the provincial rebate will only move forward if the federal legislation is passed and related regulations are put in place, the province says.
If approved, Ontario is proposing that the rebate be available for homes where:
- The agreement of purchase and sale is signed on or after May 27, 2025, and before 2031
- Construction begins before 2031
- The home is substantially completed before 2036
The Ontario government has confirmed it will monitor the federal proposal closely as it moves through the legislative process.
How the rebate would work
The new Ontario HST rebate for first-time buyers will top up the province’s existing HST New Housing Rebate, which already offers up to $24,000 in savings for eligible buyers, calculated as 75% of the provincial 8% HST portion on the first $400,000 of a new home’s value, regardless of the total value. Combined, the two rebates would cover the entire 8% provincial portion of the HST on new homes priced up to $1 million for first-time buyers.
If you’re purchasing a new home priced between $1 million and $1.5 million, the rebate amount will be reduced gradually as the home’s price increases. However, even for properties at the top of that range, buyers will still qualify for a minimum of $24,000 in tax savings. This ensures that support for buyers remains consistent with what’s already available under the current Ontario rebate.
