On March 25, 2026, the Ontario government announced a proposed expansion of HST rebate on new homes, aimed at improving housing affordability and stimulating new construction across the province.

Working in partnership with the federal government, this measure—expected as part of Ontario’s 2026 Budget—could significantly reduce upfront costs for buyers of newly built homes.

But despite headlines suggesting a full “removal” of HST, the reality is more nuanced. Here’s a clear, fact-checked breakdown of what’s changing and what it means for buyers.

What Is Ontario’s New HST Relief Proposal?

Ontario is proposing a temporary expansion of its existing HST new housing rebate, running from:

April 1, 2026 to March 31, 2027

Under this proposal:

1. Homes under $1 million

→ Eligible for up to $130,000 in HST relief (effectively eliminating the 13% HST)

1. Homes between $1 million and $1.5 million

→ Still eligible for the full $130,000 rebate

1. Homes between $1.5 million and $1.85 million

→ Receive a gradually reduced rebate

1. Homes above $1.85 million

→ Continue to qualify for the existing $24,000 rebate

This is an important distinction: the rebate does not start decreasing until $1.5 million, not $1 million as some early summaries suggested.

How Much Can You Save?

The province provided real-world examples of potential savings:

1. $700,000 home → ~$91,000 in savings
2. $1.2 million home → $130,000 in savings
3. $1.7 million home → ~$69,500 in savings
4. $1.85 million home → $24,000 in savings

For many buyers, especially those under $1.5 million, this represents a substantial reduction in upfront costs.

Who Qualifies?

To be eligible, the home must:

1. Be a new build or substantially renovated home
2. Be used as either:
3. a primary residence, or
4. a residential rental property

Timing Requirements Matter

Eligibility is not based on purchase date alone. It also depends on:

1. When the agreement of purchase and sale is signed
2. When construction begins
3. When the home is substantially completed

For example, a typical qualifying purchase for a primary residence would require:

1. Agreement signed between April 1, 2026 and March 31, 2027
2. Construction begins by December 31, 2028
3. Construction completed by December 31, 2031

Because of these layered conditions, buyers should carefully confirm their eligibility with their builder or advisor.

Why Is Ontario Doing This?

The province has positioned this policy as a response to several ongoing housing challenges:

1. Rising home prices
2. Slower new home sales since 2022
3. Limited housing supply

By reducing upfront tax costs, Ontario aims to:

1. Help more buyers enter the market
2. Support builders and developers
3. Encourage new housing construction

Industry Response

Housing industry groups—including the Ontario Home Builders’ Association (OHBA) and BILD—have welcomed the announcement.

These organizations have long advocated for expanded HST relief, arguing that previous programs—especially those limited to first-time buyers—did not go far enough to address affordability or support housing supply.

Important: This Is a Proposed, Time-Limited MeasureIt’s important to note:

1. This is a temporary program (currently set to end March 31, 2027)
2. It is part of Ontario’s 2026 Budget rollout
3. It is linked to federal coordination and implementation

In other words, while highly likely, it is not yet a permanent structural change to HST policy.

Federal HST Rebate: Additional Context

Separately, the federal government has introduced a first-time home buyers’ GST/HST rebate, offering:

1. Up to $50,000 in federal tax relief
2. Only for eligible first-time buyers

Ontario’s proposal is broader, applying beyond first-time buyers and offering significantly larger total relief in some cases.

What This Means for Homebuyers

If implemented as proposed, this could be one of the most impactful housing affordability measures in Ontario in years.

For buyers, it means:

1. Lower upfront purchase costs
2. Greater affordability under $1.5 million
3. A time-sensitive opportunity to maximize savings

However, timing and eligibility details will be critical—especially around construction timelines.

Final Thoughts

Ontario’s expanded HST rebate proposal marks a major shift in how new homes are taxed—particularly for buyers in the under-$1.5 million range.

While often described as an “HST removal,” it’s more accurately a temporary expansion of rebate relief on eligible new homes.

For anyone considering a new construction purchase, this policy could translate into tens of thousands—up to $130,000—in savings.

As always, buyers should consult with builders, legal professionals, or tax advisors to fully understand how these changes apply to their specific situation.