Premier Doug Ford and Prime Minister Mark Carney are extending the 13 per cent harmonized sales tax break on new houses and condos to everyone — not just first-time home buyers, the Star has learned.
Ford and Carney spoke by phone on Tuesday and agreed to the tax rebate for one year on all new homes worth $1 million or less in a move designed to jolt the housing construction market and boost affordability for families.
Currently, Ottawa and Queen’s Park only return the tax — five per cent federal and eight per cent provincial — for first-time buyers of new homes.
The revamped tax rebate tops out at $130,000 for homes costing between $1 million and $1.5 million and then gradually drops to $24,000 at the $1.85 million threshold. (That means a $10 million mansion, for example, would qualify for at most a $24,000 rebate, which is a measure that has been in place for the past 15 years or so.)
It is for owner-occupied primary residences or residential rental properties and purchase agreements must be signed between next Wednesday and March 31, 2027.
Construction has to begin by Dec. 31, 2028, and must be completed by Dec. 31, 2031.
The hope is that the move will mean 8,000 additional housing starts, the creation of 21,000 construction jobs, generating $2.7 billion in economic growth.
“We’re really glad that the prime minister came to the table because this will really help people,” a senior provincial government official, speaking confidentially in order to discuss internal deliberations, said late Tuesday.
“They agreed that this is a necessary step to get the housing construction moving and to make housing affordable for all homebuyers,” the official said, noting there have been months of negotiations between Queen’s Park and Ottawa.
It is unclear what the federal government’s plans are for homebuyers in other provinces because this was a bilateral agreement with Ontario.
Purpose-built rentals already qualify for similar federal and provincial tax breaks.
Ford and Finance Minister Peter Bethlenfalvy are to formally announce the move on Wednesday at a housing construction site in Mississauga.
Both the premier and Bethlenfalvy, who is tabling the provincial budget on Thursday, were tight-lipped when pressed on the issue at Queen’s Park.
“I’m not going to speculate on what we may or may not announce, but … affordability is an important issue in Ontario, for many people who dream of owning a home,” the treasurer told reporters Tuesday.
“It’s also important for the construction industry when nothing’s getting built, and particularly three or four years from now, that there’s some stimulus to the market, so to support our construction workers and the industry and a real stimulus to the market,” said Bethlenfalvy.
Ford would only say, “We just want to make it more affordable for families across Ontario to be able to buy a home.”
“We’re going to give a real boost to the building and construction trade and put more opportunity for people to buy a home,” he said, who has admitted the initial measure introduced last fall to exempt the tax for first-time buyers did not have as much impact as hoped.
The Star reported last week that Ford and Carney were working toward a temporary reprieve for all buyers of new homes.
Their hope is that the change would spur developers to build more homes at a time when housing starts have sputtered due to interest rates, rising costs of labour and material, and global economic uncertainty.
But Ford was coy when asked whether Carney had agreed with his bid to extend the tax break.
“We’re hoping that the federal government will work with us to go lock step with us, because we want affordability — and 13 per cent off a home is a big chunk of money now,” the premier said.
“We’re working alongside with the federal government, and hopefully they’ll jump on board and make it more affordable for people to buy homes right across Ontario.”
Last week, Ontario NDP Leader Marit Stiles blasted Ford for his failure to boost housing construction despite his 2022 promise to build 1.5 million new homes by 2031.
“This (HST cut) certainly might help a few people to buy a home, but I think the reality is that we are not building enough homes and we are not building enough affordable homes,” Stiles said on March 17.
In August, Ford said he was pressing Carney to lift the HST for two years for “anyone that buys a home” instead of just first-time buyers.
The existing federal first-time buyers’ rebate applies to houses purchased from a builder where the agreement was entered into between last March 20 and before 2031. Construction of eligible homes must be mostly finished before 2036.
Similarly, the provincial refund is for deals made between last May 27 and before 2031, with completion of construction before 2036.
With Files From Moira Welsh.
