Ontario Unveils Tax Rebate Plan to Ease Costs for New Homebuyers

First-time homebuyers in Ontario could soon see significant savings under a new provincial proposal to rebate the harmonized sales tax (HST) on qualifying homes, a measure that could cut tens of thousands of dollars from the cost of purchasing a property.

The Ontario government announced plans to mirror a federal initiative offering a rebate on the federal portion of the HST for first-time buyers of new or substantially renovated homes valued up to $1 million. Under the new proposal, Ontario would match this rebate by removing its provincial portion of the tax, effectively doubling the savings for eligible buyers.

The rebate program, expected to be detailed in next week’s fall economic statement, would allocate approximately $500 million over three years. Homes priced up to $1 million would qualify for the full rebate, while partial rebates would apply to properties valued up to $1.5 million.

Provincial officials framed the move as part of a broader effort to make homeownership more attainable and to ease affordability pressures for young families. “This step puts more money back in the pockets of hardworking Ontarians and helps restore the dream of home ownership,” the government said in a statement.

However, opposition parties argued that the measure does not go far enough given the scale of the province’s housing affordability crisis. Critics described the plan as “unambitious,” calling for bolder actions such as expanding the rebate to all new primary residence purchases, legalizing more diverse housing types like multiplexes and mid-rises, and reducing development charges and land transfer taxes.

While government officials highlighted that homes under $1 million are still available in many parts of Ontario, critics noted that prices in major urban centres like Toronto and the Greater Toronto Area often exceed that threshold, limiting the benefit of the rebate for those regions.

The province continues to face mounting pressure over its lagging housing construction targets. Despite a long-standing goal of building 1.5 million homes over 10 years, Ontario remains behind schedule. The latest figures show that housing starts in early 2025 were at their lowest levels since 2009, raising doubts about whether the government can meet its commitments.

As affordability challenges persist, the proposed HST rebate offers some relief for first-time homebuyers, but many observers say it is only a small step toward addressing one of Ontario’s most pressing economic and social challenges.