Ontario’s expanded new-housing rebates have received plenty of attention. Less noticed is the government’s plan to eliminate the long-standing provincial new housing rebate of up to $24,000—a change that could leave some purchasers with a larger tax bill.

Purchasers considering a new home, and builders preparing their agreements, will need to pay close attention to when those agreements are signed.

First-Time Homebuyers Rebate and Enhanced Rebate

The first-time homebuyers rebate and the enhanced rebate offer eligible purchasers substantially more relief than the existing provincial new housing rebate. Depending on the purchase price and eligibility for the federal and provincial programs, combined HST rebates can reach $130,000.

The existing Ontario new housing rebate, by comparison, generally refunds 75% of the provincial component of HST, to a maximum of $24,000. This effectively rebates six percentage points of Ontario’s eight-per-cent provincial component until the cap is reached.

The expanded rebates are available for a limited time. Under the announced timelines:

• First-time homebuyers rebate: the qualifying agreement window runs from March 19, 2025, through December 31, 2030.
• Enhanced rebate: the qualifying agreement window runs from April 1, 2026, through March 31, 2027.

Signing an agreement within these dates does not, on its own, secure a rebate. Purchasers must also meet the relevant program’s requirements, including any purchase-price limits, first-time buyer conditions, occupancy requirements, and construction or completion deadlines.

In its Fall Economic Statement, Ontario estimated that the new rebates would cost $780 million over their first three years.

Elimination of the Existing $24,000 Rebate

In the same statement, Ontario announced its intention to eliminate the existing provincial new housing rebate for agreements of purchase and sale entered into on or after April 1, 2027.

Under the announced transition, agreements entered into on or before March 31, 2027, would remain eligible for the existing rebate, provided the transaction closes by December 31, 2035, and the other eligibility requirements are met.

March 31, 2027, will therefore be an important date for purchasers who will not qualify for the first-time homebuyers relief after that date.

The final legislation and implementing rules will need to be reviewed before purchasers and builders rely on these signing and closing deadlines.

The Cost to Purchasers

For a purchaser who would otherwise qualify for the maximum existing Ontario rebate, its elimination could add $24,000 to the net HST cost, assuming the same pre-tax purchase price and no other relief to offset the increase.

That does not mean every purchaser signing after March 31, 2027, will pay the full 13% HST without any rebate. The proposed elimination concerns the existing Ontario provincial rebate. Federal relief or continuing first-time homebuyer relief may still be available, depending on the transaction and the purchaser’s circumstances.

The wording of the purchase agreement also matters. New-home prices are often quoted as inclusive of HST and net of specified rebates. If an agreement assumes that a rebate will be available and assigned to the builder, the purchaser may have to make up the shortfall on closing if that rebate is unavailable. Who bears that cost will depend on the contract.

Ontario expects the elimination of the existing rebate to save $250 million annually beginning in its 2028–29 fiscal year.

Preparing for the Change

Purchasers should check which rebates they qualify for before settling on a budget. The maximum rebate will not be available on every purchase. The price, the purchaser’s status, the intended use of the property, and the signing and completion dates can all affect eligibility.

There may be good reason to sign before the deadline. Some purchasers will want to take advantage of the enhanced rebate; others may want to preserve access to the existing $24,000 rebate. In either case, the anticipated savings should be weighed against the financing terms, closing adjustments, and other obligations in the agreement.

Builders should revisit their agreement forms and sales materials. Pricing provisions, rebate assignments, purchaser representations, indemnities, and closing adjustments should identify which rebates the price assumes and who pays if those rebates are unavailable. Extensions, assignments, and amendments will also need attention, particularly where they could affect eligibility under the transition rules.

A Change That May Catch Buyers by Surprise

The proposed elimination of the $24,000 rebate has received less attention than the expanded rebates. It may nevertheless have a significant effect on purchasers who have assumed that this long-standing relief will remain available.

As March 31, 2027, approaches, purchasers will need to confirm both their rebate eligibility and what their agreement requires them to pay if a rebate is lost. Builders should make sure their contracts address the change before that question arises on closing.