Expanded HST rebate on new Ontario homes launches Monday after three-month wait

While industry leaders lauded the decision to expand the HST rebate from first-time buyers to all buyers, frustration was mounting over the delay in the program’s official launch.

Bill C-26 received royal assent Thursday and provides more than $1.7 billion to provinces and territories to increase housing supply.

The federal money is being given to provinces and territories to administer as they please, but Ontario wanted Ottawa to administer the rebate differently.

The province asked the federal government to rebate its five per cent portion of the 13 per cent harmonized sales tax through the Canada Revenue Agency, which requires federal regulations to be enacted, leading to the three-month delay, according to the official. (The Star granted anonymity as the official could not speak publicly on the matter).

The expanded program was first announced on March 25 and the rebate came into effect for all new home purchases taking place on April 1 or later, but the delay in enacting the regulations meant that builders were operating in the dark.

“The lack of enabling regulation over the last three months of the program have resulted in an increasing number of questions on how exactly the rebate will be administered,” Dave Wilkes, president and CEO of the Building Industry and Land Development Association (BILD), told the Star. He said some buyers were “holding back on purchases until such time as the administrative mechanisms are in place.”

Sales of new single-family homes have already responded well to the HST rebate, which many builders began offering as of April 1. New-build single-family home sales outperformed the 10-year average for a second consecutive month in May, BILD said in its Monday report.

There were 830 single-family home sales in the GTA in May, a significant year-over-year increase, with sales 26 per cent higher than the 10-year average.

However, new condos accounted for 193 units sold in the GTA in May, 89 per cent below the 10-year average.

The HST rebate doesn’t help solve the persistent headwinds facing the highrise sector, as the program eligibility requirements have “defined start and completion dates for new housing projects that are too tight for most new highrise condominium projects to meet, which is likely also impacting sales,” said Justin Sherwood, chief operating officer at BILD.

The new expanded HST rebate maxes out at $130,000 for homes costing between $1 million and $1.5 million. The rebate then gradually drops to $24,000 at the $1.85 million threshold. (The $24,000 rebate had already been in effect for about 15 years.)

The rebate applies to both owner-occupied primary residences and residential rental properties, so long as purchase agreements are signed between April 1, 2026 and March 31, 2027.

Construction for primary residences has to begin by Dec. 31, 2028, and must be substantially completed by Dec. 31, 2031. For rental units, the deadline for completion is two years earlier — Dec. 31, 2029 — due to a glut of vacant residential properties languishing on the market.

Housing investors are also eligible under the rebate, which will only revive investor demand as private funds are already bulk buying condos, warns the Canadian Centre for Policy Alternatives (CCPA) in a report.

A Montreal-based real-estate company, Jesta Group, snapped up $30 million of unsold condo units in downtown Toronto, with a plan to buy $500 million worth over the next year. The firm’s senior managing director said the HST rebate allowed them to do the transaction.

With files from Robert Benzie