Bill C-4, the proposal to introduce a new GST rebate for first-time homebuyers, is expected to cost $1.9 billion over six years, according to estimates released Wednesday by the Parliamentary Budget Officer.
The rebate would cover 100% of the GST on new homes valued up to $1 million, with the maximum benefit phased out linearly between $1 million and $1.5 million.
The measure is estimated to support 71,700 purchases between the 2025 and 2030 fiscal years, or 4.8% of the projected 1.5 million housing completions during that period. The average subsidy is estimated at $26,832.
If passed, the bill would apply to home purchases made on or after May 27, 2025. It would benefit about 7,800 households in 2025 and about 12,800 purchases in each subsequent year.
Under current law, the sale of newly constructed and substantially renovated residential housing is subject to a 5% federal sales tax through the GST/HST.
The existing new housing rebate allows homebuyers to recover some of the GST/HST paid for a new or substantially renovated house or apartment intended as a primary residence for the buyer or a relative. For properties valued at or below $350,000, the rebate is 36% of the total GST paid, to a maximum of $6,300. The maximum rebate is phased out linearly for homes valued between $350,000 and $450,000.
The price thresholds for the current rebate are not indexed. As home prices rise, a declining number of new home sales qualify for the rebate. The value of rebates has declined accordingly, from $212 million in 2017 to $71 million in 2022.