Ontario’s New Proposed Tax Relief: What First-Time Home Buyers in Ottawa Need to Know
Big news for aspiring homeowners in Ottawa and across Ontario: the provincial government has just unveiled a proposal to significantly cut the tax burden for first-time home buyers. Announced as part of Ontario’s 2025 Fall Economic Statement, the plan would rebate the entire 8% provincial portion of the HST on qualifying newly built homes for first-time buyers. This means a potential savings of up to $80,000 on the price of a new home per first-time buyer – truly a game-changer for many people struggling with affordability. As a local real estate professional in Ottawa, I want to break down what this proposed tax relief means, how it works, and how it could help you achieve your dream of homeownership.
What Is the New First-Time Home Buyer Tax Relief?
In essence, the Ontario government is proposing to give back the provincial portion of the HST (8%) to eligible first-time buyers purchasing newly built (or substantially renovated) homes. Here are the key details of this proposal:
Full 8% HST Rebate up to $1 Million: If you’re a first-time buyer of a newly constructed home priced up to $1,000,000, the province would refund the entire 8% provincial HST on that purchase. This is an enormous savings – up to $80,000 off the cost of your new home! For perspective, that’s money back in your pocket rather than spent on tax.
Partial Rebate for Homes $1–1.5 Million: For new home purchases between $1 million and $1.5 million, a graduated (phased) rebate is proposed. The savings would taper down as the price increases above $1M, with a minimum rebate of $24,000 for homes valued between $1.35–$1.5 million. In other words, even on higher-priced new builds, first-timers would get at least $24k back in provincial HST relief. This phased approach ensures the rebate still provides significant help up to the $1.5M mark.
Stackable with Federal HST Relief: This provincial initiative is designed to mirror and stack with a federal incentive. Earlier in 2025, the federal government proposed removing its 5% GST portion on new homes for first-time buyers (also up to $1M). If both the federal and provincial measures take effect, a qualifying buyer could save up to a combined $130,000 in taxes on a new home purchase (about $80k from Ontario’s rebate plus up to $50k from the federal GST rebate). That’s a huge reduction in the cost of a first home!
Who Qualifies: This new rebate targets true first-time home buyers purchasing a newly built or substantially renovated home as their primary residence. (Remember, resale homes are not subject to HST on the sale price, so this relief is focused on new construction deals.) The program would be in addition to Ontario’s existing HST New Housing Rebate (which already provides up to $24,000 back on new homes) – effectively topping it up to cover the full 8% provincial tax on homes under $1M. It’s important to note that this is a proposed program, slated to be formally introduced in the fall fiscal update, and it hinges on coordination with the federal government’s plan. The province has indicated the rebate would apply to agreements of purchase and sale dated on or after May 27, 2025 (once the federal law is in place), and remain available for several years as a temporary affordability measure.
In short, Ontario is moving to eliminate the provincial sales tax on most first-time buyers’ new homes. This bold step, long advocated for by real estate industry groups, is aimed at lowering upfront costs and helping young families get into the market.
Impact on Ottawa Home Buyers
New townhomes under construction in Ottawa. The proposed provincial HST rebate is aimed at making these kinds of newly built homes more affordable for first-time buyers.
What does this all mean for Ottawa’s first-time buyers specifically? In our local market, this could be a tremendous boost. Ottawa’s average home price is hovering around $690,000 as of late 2025, which means many entry-level new homes here (think condos, townhouses, and single-family homes in new developments) fall well below the $1 million threshold. Most Ottawa first-time buyers of new construction would qualify for the full 8% rebate, translating to tens of thousands of dollars in savings. For example, on a brand-new townhome priced at $700,000, the provincial HST is 8% (about $56,000) – under this plan, virtually that entire amount could be rebated back to the buyer! That kind of relief can dramatically lower your effective purchase price or reduce how much mortgage you need, making homeownership much more attainable.
Local real estate leaders are praising the move. The Ottawa Real Estate Board (OREB) called the new rebate “a critical step in the right direction.” They emphasize that this tax break, applying to homes up to $1M, will lower costs for first-time buyers and encourage new home construction at the same time. This is a big deal for Ottawa, where increasing the supply of affordable homes is crucial – if builders are incentivized to create more starter homes and buyers can better afford them, it’s a win-win for our community. OREB and the Ontario Real Estate Association (OREA) have long advocated for measures like this to help young families and first-timers enter the market, so they see this proposal as welcome relief. (OREA’s President even said that keeping the dream of homeownership alive has been a key goal for REALTORS®, and “today’s announcement did just that”.)
It’s worth noting that some critics have argued the $1 million price cap is too low for cities like Toronto, where typical home prices are higher – they’ve called for the full rebate to extend up to $1.5 million to better help buyers in the priciest marketsbarrie360.com. However, here in Ottawa our prices are more modest in comparison, so the $1M cap comfortably covers the vast majority of first-time purchases. (Even Ottawa’s high-end first-time buyers would likely be within the limit – our market simply isn’t as expensive as Toronto’s.) In fact, Ontario’s Housing Minister highlighted that plenty of new homes outside the GTA are under $1Mbarrie360.com, meaning buyers in cities like Ottawa can generally take full advantage of the rebate. The bottom line: if you’re buying your first home in Ottawa and it’s a new build, chances are excellent that this tax relief will apply to you in full.
Why Is This Tax Relief Being Introduced?
You might be wondering, why now? The short answer is that this move comes in response to an ongoing housing affordability crisis. Across Ontario (and Canada at large), home prices have risen far faster than incomes over the past few decades, making it increasingly difficult for young people and families to get on the property ladder. To put it in perspective, in the Greater Toronto Area the average family income rose only about 34% from 1994 to 2023, while home prices more than quadrupled in that time. Ottawa has faced its own challenges with rapidly rising prices in recent years, and many prospective buyers here have felt locked out of the market. High interest rates and limited housing supply in 2024–2025 have only added to the pressure.
This new HST rebate is one way the province is trying to ease that burden on first-time buyers. It didn’t come out of the blue – in fact, Ontario’s government had signaled earlier that if the federal government stepped up with a GST break for first-timers, they would follow suit. The idea gained momentum after the federal announcement in 2025, and there’s been strong industry support pushing for tax relief. The Ontario Real Estate Association, for example, had been urging action for years to “provide incentives and new, innovative pathways to homeownership for first-time buyers”. When this HST rebate plan was unveiled, OREA immediately called it “much-needed relief” for those trying to enter the market.
Policymakers also hope that by lowering the cost of new homes, home construction will get a boost. The tax savings could encourage more first-time buyers to consider new builds, which in turn gives builders confidence to launch more projects (knowing there’s demand). Ontario has been trying various strategies to increase housing supply – from cutting red tape for developments to investing in infrastructure – and this rebate is another tool to stimulate the building of affordable homes. It’s not a silver bullet, but it tackles one piece of the affordability puzzle by reducing the upfront tax load on new home buyers. As OREB noted in its response, bringing down costs and spurring construction together can help create a “more balanced housing ecosystem” over time.
Next Steps and Tips for First-Time Buyers
It’s important to remember that this HST rebate is still a proposal at the time of writing (announced in late October 2025). The plan is set to be included in Ontario’s fall economic update (scheduled for early November 2025), and it will require enabling legislation and coordination with federal tax changes before it takes effect. The provincial government has allocated about $500 million over three years for this initiative, signalling that they are serious about moving forward. If all goes as expected, the rebate should become available for purchases in the coming months – with eligibility potentially retroactive to mid-2025 once the federal piece is in place. Keep an eye on the news from Queen’s Park and Ottawa (federal) for the final approval of these measures.
For first-time home buyers in Ottawa, here’s how you can prepare and take advantage of this relief:
Stay Informed: Follow updates on when the HST rebate officially comes into effect. The moment it’s law, you’ll want to know, especially if you’re in the process of buying a new home or planning to sign a purchase agreement soon. (If an Agreement of Purchase and Sale is signed after May 27, 2025, it’s likely to qualify under the proposed rules, but confirm timing as details are finalized.)
Factor the Savings into Your Budget: Knowing you could get up to tens of thousands back means you might be able to adjust your buying budget. For instance, a home with a $600,000 base price normally would have $48,000 in provincial HST added – but with the rebate, that $48k could effectively be waived. Perhaps that allows you to consider a slightly higher-priced new home than you originally thought, or reduce the amount of cash you need on hand at closing. Discuss these scenarios with your REALTOR® and mortgage advisor so you understand the impacts on your down payment and loan requirements.
Work with Your Builder/Realtor: If you’re buying pre-construction or a brand-new home, talk to the builder or sales office about how the rebate will be applied. Often, builders incorporate anticipated rebates into the purchase agreement (for example, charging you a net price assuming you’ll assign them the rebate). Make sure everyone is on the same page that you’re a first-time buyer eligible for this new program so that you receive the full benefit. Your real estate agent can help ensure the paperwork reflects the rebate appropriately once it’s in force.
Don’t Forget Other Programs: This HST rebate isn’t the only help available for first-time buyers. Ontario still offers a Land Transfer Tax refund up to $4,000 (which covers most or all of the land transfer tax on a starter home), and the federal First-Time Home Buyer’s Plan and First Home Savings Account can also boost your buying power. All these can stack together. The new HST relief is an additional, significant boost on top of these. Leverage every program you qualify for – combined, they can substantially reduce the cost of buying your first home.
Plan for the Long Term: While this rebate is a terrific upfront saving, remember that homeownership involves ongoing costs (mortgage, property tax, maintenance, etc.). Use the breathing room provided by the tax savings to solidify your financial foundation. For example, you might allocate what you would have paid in HST towards an emergency fund or furniture for your new place. And if you’re buying in a new development area of Ottawa, research any other incentives or grants that might be available locally as well.
Finally, celebrate this positive news! It’s not often we see taxes go down on housing. This proposed change is a strong sign that governments recognize the challenges first-time buyers face and are willing to take action. While it won’t single-handedly solve the affordability crisis, it should meaningfully lower the barrier to entry for many Ottawa buyers. As someone who works with first-time home buyers regularly, I know how even a few thousand dollars can make a difference in qualifying for a mortgage or affording that next step – so tens of thousands in savings is truly significant.
I’ll be watching closely as this proposal moves through the final approvals, and I’m optimistic it will be implemented soon. If you’re a first-time buyer in the Ottawa area, this is definitely a development to keep on your radar. It could be the helping hand that makes your home ownership dreams a reality in 2025. Feel free to reach out if you have questions about how this all works or want to discuss your home buying plans in light of the new rebate – as always, I’m here to help navigate the journey to your first home!
Sources:
Ontario News Release – Ontario Lowering Costs for First-Time Home Buyers, Oct 28, 2025lauriescottmpp.comlauriescottmpp.com. (Province proposes full 8% HST rebate for first-time buyers on new homes up to $1M; up to $80k savings, with phased relief up to $1.5M and existing rebates.)
Ottawa Real Estate Board – Statement on New HST Rebate for First-Time Home Buyers, Oct 28, 2025oreb.caoreb.ca. (OREB welcomes the rebate as a step in the right direction, noting it will lower costs for buyers and encourage construction.)
Canadian Mortgage Professional – Ontario moves to ease homeownership costs for first-time buyers, Oct 28, 2025mpamag.commpamag.com. (OREA describes the up to $80k HST relief as “much-needed”; context on home prices far outpacing incomes.)
Canadian Press via Barrie360 – Ontario proposes to rebate HST for some first-time homebuyers, Oct 28, 2025barrie360.combarrie360.com. (Details of the rebate proposal, and commentary that many homes outside Toronto (e.g. in Ottawa) are under the $1M cap.)
Ottawa Real Estate Board – Ottawa Market Stats, September 2025oreb.ca. (Average home price in Ottawa ~$690k in Sep 2025, illustrating local affordability relative to the rebate threshold.)