Last week the provincial government announced a full HST “holiday” on new homes, effective for agreements signed between April 1, 2026 and March 31, 2027.
For homes priced up to $1,000,000, the HST is fully rebated.
For homes between $1,000,000 and $1,500,000, a rebate of up to $130,000 is available.
Between $1,500,000 and $1,800,000, the rebate is gradually reduced, and it is fully phased out at $1,800,000 to the previous rebate of $24,000.
This program is no longer limited to first-time buyers. It applies to any purchaser who intends to use the property as their primary residence or rent it out on a long-term basis. Short-term rentals (such as Airbnb-style usage) does not qualify.
This is major news for the market, but it’s important to understand that it’s not as simple as just removing 13% from a home’s price.
In most cases, builders have already built the existing $24,000 HST rebate into their pricing. That means a home listed at $1,000,000 typically reflects a true price of about $1,024,000, with the builder assigning the rebate back to themselves on closing and adjusting the advertised price accordingly.
Because of this, the new HST holiday doesn’t automatically translate into a full 13% savings on top of current list prices. Instead, the actual benefit will depend on how each builder chooses to adjust their pricing, whether they pass the savings on to buyers, hold pricing steady, or reposition based on demand.
With that said a home that was previously listed at $1,000,000 (remember it really is $1,024,000) could now be sold by the builder for $894,000 without the builder taking a hit, assuming the builder passes on the entire savings to the consumer.
To make things even more interesting for the new construction market, the federal and provincial governments have also announced plans to reduce development charges across Ontario for a three-year period.
In some areas, like Toronto, early indications suggest reductions could be as high as 50%.
That said, this is still evolving. Municipalities across the province will ultimately determine how these reductions are applied, including the timing and the actual amounts. Until those details are finalized, it’s not entirely clear how much of this savings will be passed on to buyers.
What does this all mean for the market?
For starters, those who entered into new build agreements but haven’t closed, seem to be SOL. I think this will change, and there is a lot of noise about it already. If you are one of those buyers who is in a contract or who recently closed you may want to reach out to your MP/MPP. I know of a few different petitions already being circulated to get changes made to this asap.
From what I’m hearing within the industry, the early expectation is that builders will pass along the available credits to buyers. The goal being to improve affordability and, just as importantly, help move existing new build inventory.
That said, this will ultimately come down to individual builders and how they choose to position their pricing. Some may pass on the full benefit, while others may adjust more strategically depending on demand and supply. Buyer beware, know your contracts and have these reviewed by your lawyer to ensure you fully understand. I suspect most builders will advertise a lower price which includes all of the credits available, but in the event you as a purchaser do not qualify, you will be the one on the hook for the additional funds.
I also suspect this will put additional downward pressure on the re-sale market. New homes have always sold at a premium compared to re-sale and with this rebate that gap could close notably. It’s fairly easy as a seller to compete with a builder when their closings are a year or two out, if someone needs a home now, they need it now… but for those builders with ready to go inventory they are going to look very attractive to buyers. For those who have purchased new in the last few years and have struggled to sell your property, this will not be welcome news.
As someone who represents several builders, I can tell you the past few days have been hectic as everyone works through the details. The government has a “fun” way of making fairly broad announcements without all the specifics, so there’s been a lot happening behind the scenes. We’re actively working through everything alongside our legal teams to ensure the properties we represent are positioned correctly, and ultimately sold at the best possible value for buyers. If you are actively watching any of the developments we have at the River Realty Team, stay tuned as there is more to come!
New build pricing is shifting quickly, and not every incentive will be as straightforward as it appears.
If you want clarity on how these changes impact specific projects — or want early access to builder inventory and incentives — reach out directly or send us a message. We’re actively working with multiple builders and can give you real-time insight you won’t find online.
