People pass by an under-construction condo and mixed-use development at Bloor and Dufferin streets in Toronto's west end in December.Cole Burston/The Globe and Mail
More than a month after the announcement of a sales tax rebate on new-construction home purchases in Ontario, industry experts are calling on federal and provincial lawmakers to turn policy into law and make the promise of the lower prices a reality.
According to the announcement on March 25, new-home purchases in Ontario made after April 1, 2026, are eligible for a 13-per-cent rebate on the Harmonized Sales Tax, which could deliver as much as $130,000 in price relief for some purchases. However, neither federal nor provincial governments have passed the enabling legislation, leaving those in the industry unsure how to tell buyers about the potential discounts they may some day qualify for.
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“I would say different developers are doing it different ways,” said Harley Nakelsky, president of Baker Real Estate Inc., which represents more than 50 new-build home sites across the Greater Toronto region. “The majority of developers are saying to buyers: ‘Here’s your purchase price. You will then be entitled to the HST rebate, but we don’t know what that mechanism is, so you will go and deal with it, and good luck.’”
Others, he said, are offering buyers the current price minus the expected discount. For example, what was a $1-million home is now listed at $870,000. In the sales agreement, however, they note that if the rebate is not ultimately available, the buyer will be on the hook for that $130,000. The smallest group is made up of builders with a “do nothing” position, at least until the law is clear.
Part of the issue stems from the way most developers apply the current, though smaller, sales tax rebates. For example, in Ontario, there has long been an HST exemption for new homes that cost up to $450,000, which netted most buyers about $24,000.
According to Leor Margulies, lawyer and head of the commercial real estate and development group at Robins Appleby LLP, in the past, homes would typically be priced with the HST included. But the sales agreement would include a section where buyers assigned any potential rebate to the builder, which the builder would add as credit or discount to the final sale price. However, recent announcements from the Canada Revenue Agency suggest that process may no longer work.
“The problem is CRA said if you buy a house that qualifies and if you close before the legislation is in effect, we won’t allow you to conditionally assign the rebate,” said Mr. Margulies. “You have to then apply for it afterwards – whenever the law comes into effect.”
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That change was introduced late in 2025, as a result of the federal First-Time Home Buyer tax credit, which refunds five per cent of purchases up to $1-million (and a lower amount up to $1.5-million). That rebate only came into effect on March 13, almost a year after the policy was first announced on March 20, 2025. Developers are hoping the new HST rebate won’t take as long to be enacted.
As yet, builders aren’t sure if any sale they agree to today with a rebate assignment clause will be acceptable to the CRA. “Everybody’s a bit in limbo-land,” said Mr. Margulies, noting many builders are adding language to sales agreements that will allow them to delay finalizing deals until there’s clarity in the law.
According to Justin Sherwood, a senior vice-president of communications and stakeholder relations with the Building Industry and Land Development Association, industry and government have been working hard to iron out the wrinkles in the new rebate system. “Those details, we don’t have them 50 days into this announced program, but they are working on it,” he said.
In the interim, the understanding that some relief is on the way seems to have had an effect on buyer sentiment.
“We’ve done a canvass of our members; those that are selling have indicated that they’ve been selling more in the first 15 days [of April] than they did in the last three months,” said Mr. Sherwood.
The CRA has always required that investors buying new homes to use as rental properties apply directly to the agency for any tax rebate, cutting out the developer rebate contract. Today, this process is known for months-long delays in processing claims. Mr. Sherwood warns with the much larger sums of money at stake, buyers should expect even more intense scrutiny on new-home tax claims. “If you think the government was paying close attention when it’s $24,000, they’re going to be paying very close attention when it’s $130,000,” said Mr. Sherwood.
Waiting to figure out what the rules are might be the right answer, but as Mr. Nakelsky points out, many buyers assume they can get the rebate immediately. And if it’s a question as to whether to offer prices with or without the discount included, there’s another easy answer: “The lower number is getting more traction,” he said.