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In a significant policy shift aimed at easing housing affordability, Canada’s federal government has proposed a new Goods and Services Tax (GST) rebate specifically for first-time home buyers. Introduced through Bill C-4 on June 5, 2025, this rebate is designed to provide targeted relief to eligible buyers of new residential properties.
If enacted, the First-Time Home Buyer GST Rebate (FTHB GST Rebate) would apply retroactively to qualifying agreements signed on or after May 27, 2025.
What the Proposed Rebate Offers
Under the proposed legislation:
- A full 5% GST rebate (up to CA$50,000) applies to eligible new homes priced at or below CA$1 million.
- Homes priced between CA$1 million and CA$1.5 million qualify for a linear phase-out rebate.
- No rebate is available for homes priced above CA$1.5 million.
This measure mirrors certain elements of the existing GST/HST New Housing Rebate, but with tightened rules to exclusively benefit first-time buyers.
Eligibility Criteria: A Strict Framework
To qualify, an applicant must:
- Be at least 18 years old.
- Be a Canadian citizen or permanent resident.
- Use the home as their primary place of residence.
- Be the first occupant after construction or substantial renovation.
Notably, applicants and their spouses or common-law partners must not have owned or occupied a primary residence — in Canada or abroad — in the current or prior four calendar years.
Eligible Properties: Focused Scope
The rebate applies to:
- Detached or semi-detached homes.
- Condominium units.
- Shares in cooperative housing corporations that grant occupancy rights.
The home must be:
- Purchased directly from a builder.
- Built by or for the buyer on owned or leased land.
- Acquired through cooperative housing share purchases.
Strict Timelines and Lifetime Limits
The proposal includes specific deadlines:
- Agreements must be signed between May 27, 2025, and December 31, 2030.
- Construction must start before January 1, 2031, and finish before January 1, 2036.
- Ownership or possession must transfer before January 1, 2036.
Additionally:
- Each individual may claim the rebate only once in their lifetime.
- Spouses/common-law partners cannot double-claim.
- Assignment sales (property flips) linked to pre-May 27, 2025 agreements are ineligible.
Strategic Considerations for Developers and Buyers
Builders may process and assign the rebate on behalf of buyers, as with existing GST/HST rebates. However, legal experts caution that this places substantial verification responsibility on builders, exposing them to potential financial risks for ineligible claims.
Furthermore, participating provinces such as Ontario and Québec have not yet confirmed whether they will extend similar relief for the provincial component of the Harmonized Sales Tax (HST) or the Québec Sales Tax (QST).
Why This Matters
The proposed rebate comes amid escalating housing costs and growing political pressure to improve home ownership access for younger Canadians. For real estate developers, tax planners, and investors, this measure introduces both opportunities and compliance risks.
While Bill C-4 remains pending parliamentary approval, the government intends the rebate to take effect as of May 27, 2025.
Tax and legal advisors are urged to review agreements carefully and assess their clients’ eligibility under the proposed regime.
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