HST on New Homes in Ontario (and the Rebate)

Resale homes are exempt from sales tax, but new and substantially renovated homes in Ontario are not — they carry HST. The good news is that several rebates can return thousands, and a new federal rebate can remove the GST entirely for first-time buyers of homes up to $1 million. Here's how HST on new homes works and which rebates you can claim.

Key takeaways

• New and substantially renovated homes in Ontario are subject to HST; resale homes are not.
• Builder list prices often include HST net of the standard New Housing Rebate — read the fine print.
• The New Housing Rebate returns part of the HST for owner-occupied new homes.
• A new First-Time Home Buyers' GST rebate of up to $50,000 fully removes GST on new homes up to $1,000,000.
• HOMEH gives eligible buyers the industry's highest Cashback Rebate. Sellers list for 1%, or free when they also buy with HOMEH within 6 months, or $395 + HST with a Mere Posting.

Why new homes are taxed and resale homes aren't

When you buy a resale home, no HST applies to the purchase price — the tax was paid when the home was first built. But a brand-new home (or one that has been substantially renovated) is treated like a new product, so HST applies. This is a major line item that catches first-time new-build buyers off guard. For the broader picture, see closing costs in Ontario explained.

Ontario's HST is made up of a 5% federal (GST) portion and an 8% provincial portion. Both can be partly rebated on a new home you'll live in.

A home counts as 'substantially renovated' — and therefore taxable like a new build — when essentially all of the interior is removed or replaced. A simple kitchen or bathroom refresh doesn't trigger HST, but a gut renovation that takes the home back to the studs can. If you're buying a heavily renovated property, it's worth asking your lawyer whether HST applies, because the answer changes your budget materially.

The New Housing Rebate

The HST New Housing Rebate returns a portion of the HST paid on a new or substantially renovated home that will be your (or a close relative's) primary residence. There's a federal component and an Ontario component, and the federal portion phases out as price rises. Builders usually advertise prices with the standard rebate already applied — which is why the sticker price and the contract math can differ.

The practical effect is that most owner-occupiers never write a separate HST cheque — the builder applies the rebate and bakes the net figure into the price you negotiate. The complication arises when the rebate is later clawed back because the eligibility conditions weren't met, for example if the home isn't actually used as a primary residence. That's why builders ask you to sign declarations at closing, and why it pays to be honest about how you'll use the home.

Owner-occupied vs investor

The New Housing Rebate is for buyers who will live in the home. If you're buying a new home to rent out, you may instead qualify for the New Residential Rental Property (NRRP) rebate, which works differently. Confirm which applies before you close.

The new First-Time Home Buyers' GST rebate

A separate, newer rebate targets first-time buyers of new homes. The First-Time Home Buyers' GST/HST Rebate provides up to $50,000 back. It removes the full federal GST on new homes valued up to $1,000,000, and phases the benefit out between $1 million and $1.5 million.

Timing matters

This rebate applies where the agreement of purchase and sale is signed on or after May 27, 2025 and before 2031. Eligibility rules apply, so verify your situation with the Canada Revenue Agency. New to buying? See our first-time buyer GST rebate guide.

How it fits your closing budget

HST on a new home is usually folded into the purchase price with the standard rebate applied, but extras and upgrades can add taxable amounts at closing — and an investor (non-resident-occupied) purchase may require you to pay HST up front and claim the rebate afterward. Always have your real estate lawyer confirm exactly what's included.

On top of HST, a new build still carries the usual closing costs — land transfer tax, legal fees and more. See closing costs for condos vs houses and run your numbers with the closing cost calculator.

How HOMEH helps new-build buyers

Even with rebates, buying new is expensive — and every rebate or cashback dollar stacks.

Stack cashback on top of your rebate

HOMEH gives eligible buyers the industry's highest Cashback Rebate — money that stacks on top of any HST rebate you qualify for. Sellers list for 1%, or free when they also buy with HOMEH within 6 months, or $395 + HST with a Mere Posting. Estimate yours with the cashback calculator and see what you can afford with the affordability calculator.