The federal government is betting a targeted tax break for first-time buyers will help jumpstart homebuying activity in Canada, a move that could help spur transactions in one of the slowest markets in memory for many parts of the country.
Bill C-4, passed earlier this month, provides a 100 per cent GST (federal part of HST) rebate for first-time home buyers on new homes valued at or below $1 million, saving up to $50,000. This rebate applies to new builds or substantial renovations used as a primary residence, with partial rebates available for homes up to $1.5 million.
By lowering the cost barrier, the rebate could help bring more first-time buyers off the sidelines.
An opportunity for agents
Neil Chrystal, president of Polygon Homes in Vancouver, says he’s “very optimistic” the rebate will move the needle on first-time buyer confidence.
The policy shift creates a meaningful opportunity for real estate agents, he said, particularly those who are prepared to lean into the new development space.
“There’s a renewed wave of first-time buyers entering the market. These clients will need guidance, not just on the purchase itself, but on how to fully understand and leverage the rebate. Agents who can clearly articulate that value will stand out,” he told Real Estate Magazine.
He said the rebate also highlights the value of agent-developer relationships.
“Agents who are well-informed on current and upcoming projects and those who have strong connections with the developer’s sales teams will be better positioned to access opportunities early and create value for their clients,” he said.
Chrystal said first-time buyers are hungry. This month, Polygon launched sales at Stirling Block, a new community in Coquitlam, and sold 31 homes, with half of the purchasers being first-time buyers.
How the new rebate works
First-time buyers who purchased from a builder can have the rebate credited at closing, with the amount applied against the final purchase price, similar to the long‑standing GST/HST new housing rebate.
Owners who built their own homes can apply to Canada Revenue Agency online or by mail.
Applicants generally have to be at least 18, Canadian citizens or permanent residents, and neither they nor their spouse or partner could have owned a home in the previous four calendar years or previously received the first-time home buyer’s GST/HST rebate.
The CRA said that applications would start being processed in spring 2026.
In the fall, the Ontario provincial government proposed plans for additional HST relief, which would save first-time buyers of new homes in that province a total of up to $130,000 between the provincial and federal incentives. New reports say the program could be expanded in the spring budget to waive HST on all new homes, not just for first-time buyers.
Sign of hope for the construction sector
If uptake materializes, the measure could contribute to increased transaction activity, particularly in markets with available new-home inventory.
“This has the potential to kick-start much-needed residential construction,” said Richard Lyall, president of the Residential Construction Council of Ontario (RESCON) in a press release.
RESCON had been urging the federal government to ensure the legislation passed without delay so that buyers could jump in sooner.
“Without swift passage, many potential buyers would have delayed their decisions over the summer, which would have further weakened an already fragile housing market,” said Lyall.
The new measures were passed as the Canada Mortgage Housing Corporation (CMHC) reported mixed results from February’s housing starts.
Housing starts were up 10 per cent year-over-year last month in centres with a population of 10,000 or greater. This upped the year-to-date total to 31,974 units, up five per cent from the same period in 2025. CMHC said this was driven by higher starts in British Columbia and Ontario.
However, the six-month trend in housing starts was essentially flat, and CMHC’s deputy chief economist Kevin Hughes warned of “heightened levels of business uncertainty and construction costs to weigh on the rate and trend of housing starts in the near-to-medium term.”
Lyall said RESCON has been “sounding the alarm for some time” that the housing market is declining, pointing to weakness across the board.
“Projects are being shelved, sales have stalled, and job losses are mounting across the industry,” he said. “Measures like the GST elimination, which we have been pushing for some time, are exactly the type of action governments need to take to restore confidence in the market.”
Courtney Zwicker is a digital reporter and associate editor for REM. Based in Atlantic Canada, she has over a decade of experience covering daily business news.
