The Ontario government says its plan to extend the HST rebate would result in 8,000 more homes built annually.Sean Kilpatrick/The Canadian Press
Ontario’s building industry says the province’s plan to rebate the sales tax on newly built homes for more buyers – including some investors – has the potential to be a “game changer” for the preconstruction home market, which is suffering from a prolonged downturn in sales.
Under current federal and Ontario rules, only first-time buyers who plan to live in their new homes are eligible for a rebate on the 13-per-cent federal-provincial harmonized sales tax for homes priced up to $1-million, or a partial rebate on units valued up to $1.5-million.
Ontario Premier Doug Ford announced on Wednesday that the rebate would now be expanded to more buyers, including repeat buyers who plan to live in their newly purchased units, as well as some investors who plan to rent out their units. Partial rebates will be extended to homes worth as much as $1.85-million.
The change will be included in Thursday’s provincial budget. The rebate will be available over the next year, starting with purchase agreements signed April 1.
Mr. Ford said the move will be supported by a deal with the federal government that would approximately cover Ottawa’s portion of the foregone tax bill.
“We believe this to be a game changer,” Justin Sherwood, chief operating officer with trade group Building Industry and Land Development Association, said in an e-mail. Mr. Sherwood said the expanded tax rebate is “precisely what the industry needs right now to increase affordability, increase sales, stimulate construction activity and protect jobs.”
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The province’s media briefing document said investors who purchase homes to use as rental properties could qualify for the tax rebate if construction began before March 31, 2026, and will be substantially completed before Dec. 31, 2029. That suggests tax relief for investors is primarily aimed at the unsold stock of new properties and not future launches.
“It will help anyone with standing inventory, which is good, but not for new builds,” said Jeff Paikin, president of New Horizon Development Group, which has been developing new homes in the Hamilton and Toronto region for more than three decades.
Historically, investors have made up the vast majority of buyers of preconstruction condos. And developers such as New Horizon are typically required to sell about 70 per cent of the units in their condo buildings before they can get the financing to start construction.
Sales of preconstruction condos are down across the country, with particularly large drops in Southern Ontario. In the Toronto region, last year’s sales were 89 per cent below their 10-year average, while sales were 86 per cent lower in Hamilton, according to data from Altus Group.
Speaking to reporters at a housing site in Mississauga to announce the measure, Mr. Ford praised Prime Minister Mark Carney for supporting his plan, which he said involved months of negotiations.
The Premier denied a reporter’s suggestion that Ottawa only agreed to backstop the measure on Tuesday, when Mr. Ford said he spoke to Mr. Carney. No minister from the federal government spoke at the announcement.
The Canadian Press
Mr. Ford said the change would mean $2.2-billion in tax relief for buyers from both governments.
“I don’t like divulging our personal conversations, but I can tell you, the Prime Minister promised something, he delivered,” he said.
Federal Housing Minister Gregor Robertson said the deal with Ontario has been a “work in progress” when asked when it was struck.
“First and foremost, we’re in a housing crisis and we’ve got to use all the tools we have available to support the market and to build as much affordable housing as we can,” he said in an interview.
“We’ve been working with the provinces and all our partners to do those things, and this is the latest step to advance that work,” he said.
Asked if the federal government is striking deals with other provinces, Mr. Robertson replied: “Stay tuned.”
Mr. Ford urged Ontarians to take advantage of the discounts on new homes.
“This is like a big, you know, you go by these big retail stores, big sale sign saying 13 per cent off,” Mr. Ford told reporters. “So if I were people out there, I’d be buying these new homes, and do it right away.”
Michael Waters, chief executive of Minto Group, said the rebate could help bring the market back from its current extreme.
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“We’re just whipsawing Canadians back and forth with housing market volatility, soaring rents and soaring prices, now alternating with soft markets. It’s not good for the industry. It’s not good for Canadians,” he said in an interview, noting that the limited timeline for eligibility for the rebate might also get some buyers off the sidelines.
“People that might have waited 18 months or two years now really will have to make a decision a little bit sooner.”
Ontario says the tax rebates will cost almost $1.4-billion in lost revenue. But the province estimates the move will result in 8,000 more homes built annually.
Buyers of homes worth more than $1-million would also still be eligible for some tax relief.
Under the plan, new homes in Ontario worth up to $1.5-million would remain eligible for a maximum $130,000 rebate, while reduced rebates would be available for homes worth as much as $1.85-million. New homes worth more than that, under existing rules, would still qualify for a $24,000 rebate, the government says. To be eligible, construction must be completed by 2031.
Last fall, Ontario and Ottawa announced plans for similar rebates that applied only to first-time buyers of new homes.
Amid slumping housing starts, Ontario Housing Minister Rob Flack had previously said the province’s goal of building 1.5 million new homes by 2031 had become a “soft target.”
According to numbers from Canada Mortgage and Housing Corp., Ontario saw an uptick in new-home construction early this year, after months of declines. In 2025, the province recorded just over 67,000 new starts, far below the levels needed to build anything close to 1.5 million homes a decade.
With reports from Stephanie Levitz