On May 27, 2025, the Canadian government introduced a major change that will significantly benefit first-time home buyers: GST has been eliminated on the purchase of newly built homes priced under $1 million.
This change is part of the government’s broader housing plan, aimed at improving affordability and helping more Canadians achieve homeownership. If you’re a first-time buyer in British Columbia, especially in areas like Victoria, Langford, or Sooke where housing prices can be steep, this rebate could make a meaningful difference in your purchase.
What Changed?
Previously, first-time buyers were eligible for a partial GST rebate when purchasing a new home, but the full 5% GST still applied upfront. As of May 27, 2025, the government has removed GST entirely on newly constructed homes valued at less than $1 million.
Here’s how the new rebate structure works:
- Homes under $1 million: Full GST rebate (5%) – no GST payable
- Homes between $1 million and $1.5 million: Partial GST rebate on a sliding scale
- Homes over $1.5 million: No GST rebate available
These changes apply to newly built homes only, not resale properties. To qualify, buyers must meet the criteria for being a first-time home buyer under Canada’s definition.
Use Tathgar Law’s GST calculator here
Why This Matters for First-Time Buyers
For a $950,000 home, this change could save buyers up to $47,500 in GST. That’s money that can go toward closing costs, furniture, renovations, or simply making homeownership more attainable.
In a competitive market like Victoria, every bit helps – especially when you’re navigating tight inventory and rising costs. This GST change may also incentivize builders to focus more on homes under the $1 million mark, which could help increase supply in that price range.
Legal Considerations When Buying a Newly Built Home
While the GST relief is a major financial benefit, purchasing a new home still comes with legal complexities. Many buyers assume the contract is straightforward, but that’s rarely the case.
When buying pre-construction or newly built homes, you’ll need to:
- Carefully review the purchase agreement, which often favours the developer
- Understand the timeline and conditions for completion
- Ensure all taxes, rebates, and potential adjustments are accounted for in your closing documents
- Confirm that you’re properly registered for any applicable rebates
How to Make the Most of the New GST Rebate
Taking full advantage of the new GST rebate starts with understanding how it fits into your overall home buying strategy. Work closely with your mortgage broker, realtor, and legal team to ensure the rebate is correctly applied and reflected in your purchase agreement. You’ll also want to verify that your contract clearly outlines the home’s price before tax, any applicable rebates, and whether the builder has already factored them into the final amount.
By proactively addressing these details early on, you can avoid last-minute issues and ensure a smooth path to closing. When properly handled, this rebate can reduce your upfront costs significantly and help make your first home more affordable.
Frequently Asked Questions
Who qualifies as a first-time home buyer in Canada?
Do I need to apply for the GST rebate, or is it automatically applied?
What if the home is $1.2 million – how much do I save?
Does this GST exemption apply to resale homes?
How can a real estate lawyer help with a new home purchase?
Consult with a Real Estate Lawyer
As a real estate lawyer based in Victoria BC, I help clients understand what they’re signing, avoid unexpected costs, and ensure the transaction is completed smoothly. If you’re considering buying a new home, let’s make sure you’re protected from day one. Contact me today to schedule a consultation and get personalized legal guidance for your purchase.
