New home buyers have just won the HST-rebate lottery. Here’s all you need to know.

It must be like winning the lottery.

Any first-time buyer who bought or buys a new home or condo as a principal residence after March 20, 2025 — last year — can look forward to receiving a tax-free five per cent gift from the federal government up to a maximum of $50,000.

HST relief for new homebuyers is the spark needed to jump-start new-build sales.

A further $80,000 rebate from the Ontario government will also be retroactive.

At press time, the rules were still in flux and subject to change.

The federal incentive became law on March 12, 2026, with Royal Assent to Bill C-4, the Making Life More Affordable for Canadians Act.

The Ontario rebate program for the eight per cent provincial portion of the HST on new homes for first-time buyers was proposed in October 2025. However, Ontario introduced a temporary expansion of the first-time buyers HST rebate in the March budget intended for all purchasers of newly built homes, not just limited to first-time buyers and is scheduled to run from April 1, 2026, to March 31, 2027, unless it is extended.

The good news for buyers is that the windfall incentive for eligible past and future buyers of new houses and condominiums is as much as $130,000.

If the deal has closed, first-time buyers can apply to the Canada Revenue Agency for a retroactive refund of the federal tax. (How cool is that?)

If a purchase was signed within the eligibility period but has not yet closed, the price just dropped by the five per cent federal rebate and the eight per cent provincial rebate.

Calculating eligible rebates is complicated because at the moment there are two sets of rules.

The federal rebate applies to agreements signed on or after March 20, 2025. The provincial relief may also be retroactive — but to a different date.

The Ontario government has announced it will work with the federal government to propose that the new Ontario rebate be available if the agreement of purchase and sale for the home is entered into with the builder on or after May 27, 2025, and before 2031.

Construction of the home must begin before 2031, and the home must be substantially completed before 2036.

For eligible new agreements, builders should in theory be reducing the price by 13 per cent from prices posted before the government announcements. But that remains to be seen.

Here’s how the rebate is calculated: On a purchase price up to $1 million, the federal rebate is five per cent and the provincial rebate is eight per cent. On a $500,000 home, the total tax saving is $65,000. On a $1 million home, the combined tax saving is $130,000.

On new homes priced between $1 million and $1.5 million, for every $10,000 the purchase price exceeds $1,000,000, the combined rebate is reduced by $2,600. At $1.5 million, the rebates disappear.

To qualify, a buyer and his or her spouse or partner must not have owned or jointly owned a primary residence in the last five years — so it’s a novel definition of first-time buyer.

The buyer must be at least 18 years of age and a Canadian citizen or permanent resident.

The home must be the buyer’s primary place of residence. It must be pre-construction or newly-built, or one where at least 90 per cent of the interior has been substantially renovated.

The agreement of purchase and sale must be signed on or after March 20 last year, and before 2031 — when the federal program ends.

Delivery and closing must take place before 2036 and the buyer must be the first person to occupy it as a residence. The proposed retroactive date for the Ontario rebate is May 27, 2025, and not March 20, 2025.

There is no federal rebate for homes purchased before March 20, 2025, and no provincial rebate for homes purchased before May 27, 2025.

Buyers should note that the critical date is the date of the agreement, not the closing date.

Assignment agreements are ineligible if the underlying agreement predates the eligibility requirements.

Hopefully these rebates will provide a massive incentive for first-time buyers and a shot-in-the-arm for the building industry.

Update – April 9,2026

This column was updated from a previous version to note that the Ontario rebate program for the eight per cent provincial HST rebate on new homes for first-time buyers was proposed in October 2025, not during the latest budget in March. Ontario introduced a temporary expansion of the first-time buyers HST rebate in the March budget intended for all purchasers of newly built homes.