How the new HST program works for NEW BUILDS

by Gautam Khanna

The new HST program for new builds took effect on April 1^st. If you are looking at a new build, please note that this is a time limited option, however this new program significantly reduces HST on qualifying new homes. Rentals are also included in this program. Below is a breakdown for you to understand the differences regarding HST prior to and after April 1^st.

1) How HST on new homes worked before April 1, 2026

New homes in Ontario are generally subject to 13% HST:

5% federal GST
8% Ontario portion

Under the old structure, the Ontario new housing rebate was generally capped at $24,000.

2) Example using an $800,000 new home

Purchase price before HST: $800,000

Federal GST (5%):
$800,000 × 5% = $40,000

Ontario portion (8%):
$800,000 × 8% = $64,000

Total HST:
$40,000 + $64,000 = $104,000

Old Ontario rebate:
Maximum $24,000

Remaining tax impact:
$104,000 − $24,000 = $80,000

That is how we get to the $80,000 number.

3) How this works in real transactions with builders

This is still a rebate system.

In many new build transactions:

The buyer assigns the rebate to the builder
The builder factors that rebate into pricing (price sheets often reflect the rebated amount)
The buyer does not usually receive a cheque later

Unsold builder inventory (never occupied homes) may also qualify, provided they are still considered new for HST purposes.

4) What changes starting April 1, 2026

Ontario announced on March 25, 2026 that, in partnership with the federal government, it will temporarily expand HST relief on qualifying new homes from April 1, 2026 to March 31, 2027.

The key takeaway:

The relief is broader than what agents are used to
The potential savings can be significant
Do not assume identical treatment on every deal

5) How the new rebate scales (based on price)

Based on current guidance:

Homes under $1,000,000
→ Up to full 13% HST reduction
Homes between $1,000,000 and $1,500,000
→ Up to $130,000 in total tax relief
Homes between $1,500,000 and $1,850,000
→ Relief gradually reduces from $130,000 down to $24,000
Homes above $1,850,000
→ Continue to receive the existing $24,000 Ontario rebate only

These are the current announced thresholds, but exact treatment should still be confirmed per property and builder.

6) What this means in plain language

Before April 1:
Buyers often had a significant HST cost built into the transaction

After April 1:
That HST cost may be significantly reduced, and in some cases reduced to very little, depending on the property, builder, and how the program is applied

7) Key dates to note:

Buyers have until March 31, 2027 to capitalize on this deal.

Homes bought as a primary residence must have construction begin on or before December 31/2028 and be completed on or before December 31/2031.

Homes bought as a rental property must have construction completed on or before December 31/2029.

If you have any questions, please feel welcome to reach out! It would be a pleasure to help!