CHBA says 'housing supply gap is still widening' despite measure
The Canadian Home Builders’ Association (CHBA) has praised the announcement of a GST cut on home purchases by first-time buyers but pushed for broader application beyond first-time buyers.
The measure, announced during April’s federal election campaign, would see the GST scrapped on home purchases by first-time buyers up to and including $1 million, and featured in King Charles’ throne speech yesterday (May 27).
The CHBA suggested the decision could help ease access to Canada’s housing market and move buyers off the sidelines.
“For years, CHBA has been advocating for a change to the GST thresholds on new construction homes to help address housing affordability challenges in regions across the country, and this measure is a very positive step forward for Canadians,” said CHBA CEO Kevin Lee.
Lee noted that uncertainty since the election promise was made had delayed sales and stifled new home starts.
“It is encouraging that today first-time buyers can have the confidence to move forward,” he said.
However, the association emphasized that GST thresholds have not been updated since the tax’s introduction in 1991, despite a significant rise in home prices, and that further reform is overdue.
CHBA is urging the government to extend the rebate to all homebuyers, not just first-timers. It also recommended including Accessory Dwelling Units (ADUs) and secondary suites, as wells as base eligibility on the date of legal possession rather than the contract date to prevent penalizing buyers already in the pipeline.
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Without those adjustments, many buyers currently waiting on home completion could be left out.
“There will be many frustrated Canadians who have signed purchase and sale agreements already and will not be eligible, but are a long way off from taking possession of their home, which may not even be under construction yet,” CHBA said.
“While the quick action to move on the FTHB GST Rebate is welcome as it will go a long way to enable first-time home buyers to access homeownership, the housing supply gap is still widening,” Lee added. “We still urge the federal government to extend this measure to all home buyers, and reconsider the eligibility to make it based on closing date, not date of purchase and sale.”
Government pushes ahead with election promise
Under the new First-Time Home Buyers’ GST Rebate (FTHB GST Rebate), qualified buyers could save up to $50,000 on the purchase of a new home. The federal measure is expected to deliver $3.9 billion in tax savings over the next five years and is being positioned as a key lever to address affordability and stimulate housing starts.
“Our government is laser-focused on lowering costs for Canadians and making homeownership a reality,” prime minister Mark Carney said in a March 2025 statement. “Eliminating the GST will save first-time homebuyers up to $50,000 and spur housing construction across the country. We will announce a series of new measures to increase housing supply shortly.”
Who qualifies and how it works
The rebate will apply to new homes purchased from a builder, homes constructed by the buyer (or by a hired contractor), and shares in cooperative housing corporations. The measure mirrors the existing GST/HST New Housing Rebate structure but modifies it to specifically benefit first-time buyers.
To qualify, an applicant must be at least 18 years old, a Canadian citizen or permanent resident, and must not have owned or lived in a home they or their partner owned in the calendar year or the four preceding years.
Buyers of new homes priced at $1 million or less will receive a 100% GST rebate. For homes valued between $1 million and $1.5 million, the rebate is phased out linearly. For example, a $1.25 million home would qualify for a 50% GST rebate.
The measure applies to purchases where the agreement of sale is signed on or after May 27, 2025, and before 2031, with construction beginning before 2031 and substantial completion before 2036. Owner-builders and co-op purchasers are held to similar timelines.
The government noted that eligibility is limited to a single use per lifetime and is void if either the buyer or their spouse/common-law partner has previously claimed it. Assignment sales based on agreements signed before May 27, will also be ineligible, as will restructured contracts originally dated prior to that cut-off.
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