Builders of new homes across Canada must determine whether the sales of these homes may qualify for the new GST rebate available to eligible first-time home buyers. Finance released legislative proposals on May 27, 2025 to enact this temporary new GST rebate, which will effectively remove the GST on qualifying new homes valued up to $1 million, and reduce GST on eligible new homes valued between $1 million and $1.5 million, effective for purchase and sale agreements entered into by first-time home buyers after May 26, 2025 and before 2031. Note that the new GST relief is also available on certain transactions where an eligible individual builds or substantially renovates an eligible home.
Builders of new homes, particularly those that factor eligible GST housing rebates into their pricing, should review these proposals to determine how they are affected by these rules and to limit related tax challenges. Although the proposals appear to allow an individual to submit an application to a builder to claim this rebate, the CRA has not yet provided details on how it intends to administer these rules. As a result, builders should take steps now to understand who qualifies as an eligible first-time home buyer, the types of new homes that may qualify under the new GST rebate, as well as the various restrictions for agreements entered into before May 27, 2025.
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