What Every Buyer Needs to Know in 2026
Up to $130,000 in Tax Savings Is Now on the Table
Ontario’s Historic HST Rebate Expansion: What Buyers of New Construction Homes Need to Know
By Zoran Kukic
If you have been considering purchasing a newly built home or an investment property in Ontario, there has never been a better time to make your move. In a landmark announcement on March 25, 2026, the Ontario government, in partnership with the federal government, revealed a massive expansion to the Harmonized Sales Tax (HST) rebate for new construction homes [1].
This unprecedented policy shift is designed to stimulate housing supply and make homeownership more attainable. By eliminating the provincial portion of the HST and combining it with federal incentives, eligible buyers can now save up to $130,000 on a newly built home [2].
Whether you are a first-time homebuyer, a growing family looking to upgrade, or an investor seeking purpose-built rental properties, understanding how this rebate works is crucial to maximizing your purchasing power.
The Expanded HST Rebate Explained
Historically, the HST rebate on new homes was primarily targeted at first-time buyers and capped at much lower thresholds. However, the new expansion temporarily opens the doors to all buyers and significantly increases the eligible property values [2].
For a one-year period—from April 1, 2026, to March 31, 2027—the Ontario government is removing the full 13% HST for eligible buyers of new homes valued up to $1 million [1]. This initiative builds upon the federal government’s First-Time Buyer GST Rebate (Bill C-4), which already eliminates the 5% federal GST for eligible first-time buyers [2].
How Much Can You Save?
The amount you can save depends on the purchase price of the newly constructed home. The maximum combined rebate is capped at $130,000. Here is a breakdown of how the rebate scales based on the home’s value:
| Home Value | HST Rebate Status | Maximum Potential Rebate |
|---|---|---|
| Up to $1,000,000 | Full 13% HST eliminated | Up to $130,000 |
| $1,000,000 to $1,500,000 | Maximum rebate maintained | $130,000 |
| $1,500,000 to $1,850,000 | Rebate decreases proportionally | Scales down from $130,000 to $24,000 |
| $1,850,000 and above | Base rebate applies | $24,000 |
Note: The exact savings will depend on whether you qualify for both the provincial expansion and the federal first-time buyer rebate.
Who Qualifies for the New Rebate?
One of the most exciting aspects of this announcement is the broadened eligibility criteria. You no longer need to be a first-time homebuyer to benefit from the provincial tax relief.
To qualify for the expanded Ontario HST rebate, buyers must meet the following conditions:
- Timing: The Agreement of Purchase and Sale must be signed between April 1, 2026, and March 31, 2027 [2].
- Property Type: The home must be newly built or substantially renovated [2]. Resale homes are not subject to HST and therefore do not qualify.
- Intended Use: The property must be used as a primary residence or as a residential rental property [1].
- Construction Deadlines: For primary residences, construction must begin by December 31, 2028, and be substantially completed by December 31, 2031. For rental properties, construction must be substantially completed by December 31, 2029 [2].
A Major Win for Real Estate Investors
In a significant departure from previous policies, the expanded Ontario rebate explicitly covers residential rental properties [2]. This is a strategic move by the government to encourage the construction of purpose-built rentals. If you are an investor purchasing a new build to rent out, you can access the combined 13% rebate during this one-year window, significantly improving the return on your investment.
How to Claim the Rebate
Navigating tax rebates can seem daunting, but the process for the new housing rebate is generally streamlined into the closing of your property.
In most cases, builders will credit the rebate directly on the statement of adjustments at closing [2]. This means the rebate amount is subtracted from the final amount you owe, effectively lowering your closing costs upfront. The builder will then claim the rebate from the Canada Revenue Agency (CRA) on your behalf.
However, it is imperative to ask your builder and your real estate lawyer to confirm exactly how the rebate will be handled in your specific transaction. For certain retroactive federal claims (for homes closed between March 20, 2025, and March 12, 2026), buyers may need to apply directly to the CRA [2].
What This Means for the Ontario Real Estate Market
The Toronto Regional Real Estate Board (TRREB) has strongly supported this measure, noting that removing this tax burden will lower the cost of new housing and improve the feasibility of bringing new projects to market [3]. The province estimates this initiative could stimulate an additional 8,000 housing starts and support up to 21,000 jobs [1].
For buyers, this means increased inventory and a rare opportunity to purchase new construction at a substantial discount. However, demand-side incentives can also increase competition. As more buyers enter the market to take advantage of the tax savings, it is crucial to act decisively and strategically.
Ready to Make Your Move?
With up to $130,000 in tax relief on the table, 2026 is shaping up to be a phenomenal year to invest in new construction in Ontario. Whether you are looking for your dream home or a lucrative rental property, having an experienced real estate professional by your side is essential to navigating the complexities of pre-construction purchases and ensuring you maximize your eligible rebates.
Contact me today to explore the best new construction projects currently available and to discuss how this historic HST rebate can work for you.
References
[1] Ontario Newsroom. “Ontario Expanding HST Rebate to Lower the Cost of New Homes in Partnership with the Federal Government.” March 25, 2026. https://news.ontario.ca/en/release/1007212/ontario-expanding-hst-rebate-to-lower-the-cost-of-new-homes-in-partnership-with-the-federal-government
[2] Deeded. “Ontario and Ottawa Are Eliminating Up to $130,000 in HST on New Homes — Here’s Who Qualifies.” March 25, 2026. https://www.deeded.ca/blog/hst-rebate-on-new-homes
[3] Toronto Regional Real Estate Board (TRREB). “HST Elimination for all Buyers of New Housing is a Major Step Forward.” March 25, 2026. https://trreb.ca/hst-elimination-for-all-buyers-of-new-housing-is-a-major-step-forward/
