Ontario Construction News staff writer
The Ontario government is moving to cut the harmonized sales tax (HST) on new homes for first-time buyers, a measure the Residential Construction Council of Ontario (RESCON) says could help make housing more affordable.
“Lowering the excessive tax burden on the purchase of a new home for first-time buyers, in line with what the feds have done, will help those who have been priced out of the market,” said RESCON president Richard Lyall. “First-time buyers account for roughly 35 per cent of new home purchases but they have been particularly hard hit… This initiative will help to prevent younger talent and families from leaving the Greater Toronto Area and the province.”
Lyall also highlighted the timing as critical, noting that housing starts in Toronto are near a 30-year low and sales have slowed significantly. RESCON research indicates that taxes, fees, and levies currently account for 36 per cent of the cost of a new home.
Finance Minister Peter Bethlenfalvy announced Tuesday that Ontario will introduce a provincial HST rebate to mirror the federal proposal. The federal measure eliminates the GST on new and substantially renovated homes priced up to $1 million for first-time buyers, with partial relief for homes up to $1.5 million. Combined, the two measures could save first-time buyers up to $130,000 on a $1-million home.
“Today, we’re taking steps to continue making life more affordable and to restore the dream of home ownership for more families by working with the federal government to mirror their proposed HST/GST first-time homebuyers rebate,” Bethlenfalvy said. About $500 million over three years is being allocated to the provincial portion, which will be detailed in next week’s fall economic statement.
While the program applies to homes up to $1 million for the full rebate, partial rebates will phase in for homes up to $1.5 million. Municipal Affairs and Housing Minister Rob Flack said many homes under $1 million remain available outside the Greater Toronto Area. “There are in my home community…you can buy homes in St. Thomas for $650,000, beautiful new homes,” he said.
Opposition leaders criticized the plan as insufficient. Green Party Leader Mike Schreiner said homes up to $1.5 million should qualify for the full rebate in higher-priced areas. “(It’s) just unambitious. We’re in the worst housing crisis in Ontario history…this government’s tinkering around the edges,” he said.
Liberal housing critic Adil Shamji called it “too little, too late,” while NDP Leader Marit Stiles said the government has abandoned its goal of building 1.5 million homes over 10 years. Housing starts in the first quarter of 2025 hit their lowest levels since 2009, according to the Financial Accountability Officer.
Lyall said RESCON will monitor the impact of the measures on first-time buyers and continue advocating for broader reforms to increase housing supply.