No GST for First Time Home buyers

Prime Minister Mark Carney announced today that the Government of Canada will eliminate the Goods and Services Tax (GST) for first-time homebuyers purchasing homes at or under $1 million.

This significant tax cut will save eligible Canadians up to $50,000 on their home purchase, providing immediate relief in Canada’s ongoing housing affordability crisis. The measure aims to help more young people and families achieve homeownership while simultaneously boosting housing supply by incentivizing new construction.

“Our government is laser-focused on lowering costs for Canadians and making homeownership a reality,” said Prime Minister Carney. “Eliminating the GST will save first-time homebuyers up to $50,000 and spur housing construction across the country.”

The Canadian Home Builders’ Association (CHBA) welcomed the announcement, noting that GST thresholds have remained unchanged since the tax’s introduction in 1991, despite substantial increases in housing prices. CHBA CEO Kevin Lee called the move “a step in the right direction” that is “long overdue.”

The Prime Minister indicated this is just the first in a series of upcoming measures designed to increase housing supply, with his government committed to “building a Canada you can afford.”

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Conservatives Propose GST Cut on New Homes Under $1.3 Million

Election Housing Promises Heat Up

Conservative Leader Pierre Poilievre has promised to eliminate the goods and services tax on new homes priced under $1.3 million if his party wins the upcoming federal election. According to Poilievre, this tax cut could save Canadians up to $65,000 on home purchases and reduce annual mortgage payments by approximately $3,000.

The announcement comes shortly after interim Prime Minister Mark Carney called a snap election for April 28, 2025. Carney recently pledged that a Liberal government would remove the GST on new homes under $1 million, but only for first-time buyers.

Economic Impact Claims

Poilievre’s campaign video, released Tuesday morning, claimed the tax cut would stimulate construction of 36,000 additional homes annually and generate $2.52 billion in income taxes from construction workers and businesses.

“We will also incentivize municipalities to free up land, speed up permits, and cut development charges to build 15% more per year,” Poilievre stated. “Under my plan, a young couple in Surrey, a single mom in Oshawa, a tradesman in Regina, will all be able to get on the housing ladder just like their parents did.”

Policy Evolution

Previous Proposal Expanded

This announcement represents an expansion of Poilievre’s earlier pledge from October, which proposed waiving sales tax on new houses under $1 million. At that time, he estimated the measure would reduce the cost of an $800,000 home by $40,000 and lead to 30,000 additional homes built each year.

Funding the Tax Cut

To fund the tax cut, Conservatives previously indicated they would eliminate the Housing Accelerator Fund and Housing Infrastructure Fund, describing them as ineffective and bureaucratic, with potential government savings of approximately $8 billion.

Expert and Industry Reactions

Addressing Regional Price Disparities

While the original policy was generally well-received, economist Mike Moffatt of the Smart Prosperity Institute had expressed concerns that it would exclude the Greater Toronto and Greater Vancouver areas, where even entry-level housing can exceed $1 million. Moffatt had suggested a phased approach for homes up to $1.5 million to better accommodate pricier regions.

Moffatt also opposed implementing the tax cut at the expense of existing housing programs, stating that “the core idea of these programs is sound” though they could benefit from “better oversight.”

Industry Support

The revised proposal has garnered praise from development sector stakeholders. The Residential Construction Council of Ontario (RESCON) stated that extending the waiver to include homes under $1.3 million “more accurately reflects market realities.”

Matthew Young, President and CEO of Republic Developments and Chair of the Coalition Against New-Home Taxes (CANT), praised the Conservatives for “listening to industry.”

“It’s less about the policy, it’s more about the action,” Young said. “When we launched our campaign last year, we had encouraging meetings with many levels of government, and the first leadership in government that wanted to do anything was Pierre Poilievre, and they came out with a policy on GST. We then highlighted some of the issues with the policy, and they’ve now come back and corrected the policy and adjusted it.”

Developer Commitment to Pass Savings to Buyers

CANT, a coalition of approximately 30 builders including Republic, Alterra, Altree Developments, MOD Developments, Stafford, and Harlo Capital, has committed to reducing their prices “dollar for dollar” for any tax savings achieved by any level of government.

“So if this policy were to be introduced and become law, on call it a $1.25-million home, we would save $62,500 in GST. And so the price of that home would drop from $1.25 million to $1,187,500,” explained Young. “We are committed to doing that, and as soon as a policy like this gets implemented, our coalition is going to be very public about announcing price cuts on our projects as a result of these changes.”

According to Young, CANT plans to issue a formal statement outlining potential cost savings for homebuyers.

Young also expressed hope that provincial governments would follow suit by reducing the PST component of the HST, stating that such measures “would have an even more positive impact on reducing the pricing of housing… And that’s something that can be done today.”