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In a new analysis released Wednesday, federal fiscal regulators predict that 71,711 new buildings in the program will be eligible for GST relief in their lifetime.
The proposal will see that a portion of the federal sales tax on sales taxes if a qualified first-time home buyer purchases a new home is worth up to $1 million.
As the price of the home reaches $1.5 million, the GST discount will be eliminated.
Homes purchased from May 27 to 2031 can qualify for discounts as long as construction begins before 2031 and cannot be completed until 2036.
Canadians who own a home are no longer eligible for GST relief – with some exceptions. None of the investors.
The PBO predicts the plan will cost $1.9 billion in six years, while the federal government sets Canadians’ “tax savings” at $3.9 billion in five years.
The latest cost estimate for PBO is about $100 million lower than the figure cited during the spring federal election when the GST was proposed. It attributes the gap to later implementation dates, as well as different definitions for first-time home buyers.
A Desjardins economics analysis of the proposal released on Monday provides an explanation for the difference between the cost estimates of PBOs and the government’s figures: Ottawa may think its plans will be more popular than PBOs.
Higher cost estimates suggest that, in other words, more first-time home buyers buy qualified new buildings.
GST rebates, which have not yet been legal, are included in the liberals’ spring election platform to help Canadians break into the housing market.
A home with a price of $1 million will receive a maximum rebate of $50,000. Homes that are priced below that amount will still receive full rebates – but because the sales tax is a smaller share of the final cost, the rebates will also be lower.
The rebate for sold homes will also be below $1 million above $50,000 as the rebate gradually drops until it is zero for $1.5 million.
Desjardins of economist Kari Norman reported that if the program proves to be popular among first-time home buyers, it could stimulate additional housing construction to meet higher demand.
PBO said behavioral responses to the program were not included in its analysis.
Norman noted in her report that demand from home buyers may also raise prices in the near future.
She estimates that 85% of new homes built for Canada within the planned deadline are eligible for a full GST breakup of up to $50,000.
She said that if the GST on new home sales were included in the mortgage principal, a typical owner could save $240 a month on mortgage payments. Savings are more direct when developers charge GST in advance.
The measure is packaged in the law, which also includes tax cuts promised by liberals, which will take effect on July 1.
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Last modified: June 11, 2025
