Ontario HST Rebate: Up to $130K for New Homes – Ford Government Plan

Ontario to Temporarily Eliminate HST on Fresh Homes, Boosting Affordability

Premier Doug Ford’s government announced Wednesday a plan to temporarily remove the Harmonized Sales Tax (HST) on new homes in Ontario, a move officials say is designed to stimulate the struggling construction sector and make homeownership more accessible. The proposal, effective April 1, 2026, and lasting until March 31, 2027, would eliminate the full 13 per cent HST for new homes valued up to $1 million. This significant tax break aims to alleviate a major cost barrier for prospective homebuyers.

How the HST Rebate Will Work

The program offers a maximum rebate of $130,000 for eligible buyers of new homes valued up to $1 million. For homes valued between $1 million and $1.5 million, the maximum rebate remains at $130,000, decreasing proportionally as the home’s value increases. Homes valued at $1.85 million or more would qualify for a reduced rebate of $24,000. The province will cover eight per cent of the HST, while the federal government will cover the remaining five per cent. Yet, the full implementation of the program hinges on the passage of corresponding federal legislation.

Eligibility Requirements and Timelines

To qualify for the HST rebate, buyers must sign a purchase agreement with a builder between April 1, 2026, and March 31, 2027. Construction of the home must start on or before December 31, 2028, and be substantially completed by December 31, 2031. There are also provisions for homes where construction began before March 31, 2026, allowing eligibility if the purchase agreement is signed within the specified timeframe and construction is completed by December 31, 2029. The home must be intended for utilize as a primary residence or a residential rental property.

A Response to a Slowing Housing Market

The announcement comes as the Ontario housing market faces headwinds, with new condo projects in Toronto particularly struggling to launch amid rising construction costs and weaker demand. The Ford government estimates the program will spur an additional 8,000 housing starts and support up to 21,000 jobs, contributing an estimated $2.7 billion to the province’s real GDP. Premier Ford directly urged builders to “start building,” signaling a desire to quickly translate the tax relief into increased housing supply. The move is also intended to address the broader issue of affordability, with officials stating the aim is to “bring the dream of home ownership in reach for thousands of Ontario families.”

Confirmed vs. Unclear Details

While the broad strokes of the program are clear, some details remain to be fully fleshed out. The exact process for claiming the rebate, and the specific mechanisms for proportional reductions on homes valued between $1 million and $1.85 million, will be included in the upcoming provincial budget. The timing of the federal legislation required to implement the five per cent federal portion of the rebate is also currently unspecified. The government estimates the program will cost the province $1.4 billion, but a detailed breakdown of these costs has not yet been released.

Background: HST and Homeownership in Ontario

The Harmonized Sales Tax (HST) in Ontario is 13 per cent, combining the eight per cent provincial sales tax and the five per cent federal Goods and Services Tax (GST). Previously, the federal GST/HST First-Time Home Buyers’ Rebate was available to eligible first-time homebuyers, offering a refund of a portion of the HST paid on the purchase of a new home. This new initiative expands that relief to *all* homebuyers for a limited period. The expansion of the rebate represents a significant shift in provincial policy, aiming to address affordability concerns across a wider range of potential homeowners.

Industry Reaction and Municipal Considerations

The Building Industry and Land Development Association (BILD) has welcomed the announcement, stating it will “significantly reduce upfront homeownership costs” and support the industry. However, the province is also urging municipalities to eliminate development charges, which can add substantial costs to new home construction. Premier Ford emphasized that the province is “doing our part” by cutting taxes and fees, and called on municipal leaders to “step up too.” The extent to which municipalities will respond to this call remains to be seen.

Further details regarding the program will be included in the upcoming 2026 Ontario Budget. You can find more information on the Ontario government’s website: Ontario Expanding HST Rebate to Lower the Cost of New Homes.