The HST treatment of new housing is about to change yet again, with the elimination of the long-standing $24,000 rebate.

First-time homebuyers rebate and enhanced rebate

As we have previously reported, the first-time homebuyers rebate and the enhanced rebate have provided substantial HST relief to purchasers of new housing in Ontario, providing purchasers with maximum rebates of up to $130,000 of the HST.

These rebates are much more generous than the previously existing rebate of 6 of the 8% provincial component of the HST in Ontario, which provided a maximum rebate of only $24,000. In its recent Fall Economic Statement, the Government of Ontario reported that the total cost of the new rebates was expected to be $780 million in the first three years.

Both the first-time homebuyers rebate and enhanced rebate are time limited. The first-time homebuyers rebate applies to purchase agreements entered into between March 19, 2025 and December 31, 2030, and the enhanced rebate applies to purchase agreements entered into between April 1, 2026 and March 31, 2027.

Elimination of existing rebate

In the Fall Economic Statement, the Government of Ontario announced its intention to eliminate the existing new housing rebate of $24,000 for purchase agreements entered into on or after April 1, 2027. Agreements of purchase and sale entered into before March 31, 2027 will still qualify for the existing rebates, provided the purchase and sale is closed by December 31, 2035.

The result of this announcement will be that purchasers who enter an agreement of purchase and sale for the purchase of a new home after March 31, 2027 (other than qualifying first-time homebuyers) will pay the full 13% HST without the benefit of the $24,000 rebate on all purchases of new residential housing. The Government of Ontario expects to save $250 million annually from its 2028/29 fiscal year, a substantial savings in tax revenues.

This announcement has not received the flurry of media attention as the increases to the new housing rebates and may come as a significant surprise to purchasers next year.  We anticipate that purchasers of new residential housing will be quite motivated to enter into agreements of purchase and sale to gain the benefits of the enhanced rebate or, for higher purchase prices that do not benefit from the enhanced rebate, the existing rebate. Builders will need to revisit their forms of agreement to address this further change.

If you have any questions, please contact the authors or a member of Gowling WLG’s Real Estate team.