The Ontario government just handed Toronto home buyers one of the biggest tax breaks in a generation — and most people still don’t fully understand how to use it.
On March 25–26, 2026, Ontario announced and tabled the removal of the full 13% HST on new home purchases as part of its 2026 provincial budget. For first-time buyers entering Toronto’s cooling market right now, the timing could not be better. Ontario removes HST on new homes in 2026, and first-time buyers in Toronto can save up to $50,000 — and in some cases, significantly more — when you stack this with federal relief measures, improved mortgage rules, and today’s buyer-friendly market conditions.
This guide breaks down exactly what the HST removal means for you, how Bill C-4’s federal GST relief stacks on top, what the Toronto market looks like right now, and the practical steps you need to take before March 31, 2027.
Key Takeaways 🏠
- Ontario removed the full 13% HST on new home purchases for agreements signed between April 1, 2026 and March 31, 2027 — a one-year window.
- Savings can reach up to $130,000 on homes up to $1.5 million (provincial + federal combined); first-time buyers can stack additional federal rebates.
- Toronto is in a buyer’s market right now — average prices are at 5-year lows ($1,017,796, down 6.7% year-over-year) with 5.0 months of supply.
- New mortgage rules now allow 30-year amortizations and insured mortgages up to $1.5 million, improving affordability significantly.
- Self-employed buyers and investors also qualify — this program is not limited to first-time buyers.
What the Ontario HST Removal Actually Means for New Home Buyers
Let’s be precise about what changed, because the details matter enormously.
The Full 13% HST Is Gone — For Now
The HST on new homes in Ontario is made up of two parts:
- 8% provincial portion (Ontario’s share)
- 5% federal portion (Ottawa’s share)
Ontario is removing its 8% provincial portion, and the federal government is handling the 5% federal portion through its own rebate program (more on that below). Together, the full 13% HST is effectively eliminated for qualifying new home purchases.
Who Qualifies?
This is where many early news reports got it wrong. The program is not limited to first-time buyers. The HST relief applies to:
✅ First-time home buyers
✅ Move-up buyers purchasing new construction
✅ Real estate investors buying new rental properties
✅ Anyone purchasing a newly built home
The original October 2025 announcement focused on first-time buyers, but the final 2026 budget expanded eligibility to all buyers of new homes. This is a significant broadening of the policy.
The Rebate Structure at a Glance
| Home Price | Combined HST Rebate | Net Savings |
|---|---|---|
| Up to $1,000,000 | Full 13% HST removed | Up to $130,000 |
| $1,000,000 – $1,500,000 | Full $130,000 rebate still applies | $130,000 |
| $1,500,000 – $1,850,000 | Rebate phases out gradually | $24,000 – $130,000 |
| $1,850,000+ | Minimum rebate | $24,000 |
💡 Pull Quote: “For a $900,000 new condo in Toronto, removing 13% HST saves the buyer $117,000. That’s a down payment in itself.”
Important: This rebate applies to new construction only — not resale homes. If you’re buying a pre-construction condo or a newly built freehold, you qualify. Buying a 10-year-old semi-detached? You do not.
The Canada Revenue Agency (CRA) will administer these rebates once the legislation is fully passed. Keep your purchase agreements and closing documents organized.
How Bill C-4 Adds Federal GST Relief on Top
The federal government’s Bill C-4 eliminates the GST for first-time home buyers on new homes priced up to $1 million, and reduces it on homes priced between $1 million and $1.5 million.
For first-time buyers specifically, there’s a dual rebate opportunity: you may qualify for the standard GST/HST new housing rebate and the First-Time Home Buyer (FTHB) GST/HST rebate — the FTHB rebate acts as a top-up, maximizing your total tax relief. This is the mechanism through which first-time buyers in Toronto can save up to $50,000 through the federal layer alone, on top of provincial savings.
To understand how this stacks with other programs like the Home Buyers’ Plan, check out our guide on RRSPs and the Home Buyers’ Plan and the Tax-Free First Home Savings Account.
Toronto Market Conditions in 2026: Why the Timing Is Exceptional
The HST removal doesn’t exist in a vacuum. It lands at a moment when Toronto’s real estate market is offering buyers a rare combination of lower prices, more inventory, and improved financing options.
Prices Are at 5-Year Lows
The average Toronto home price currently sits at $1,017,796 — down 6.7% year-over-year. The market has 5.0 months of supply, firmly in buyer’s market territory (anything above 4 months favors buyers). This means:
- More negotiating power for buyers
- Less competition on offers
- More time to do proper due diligence
For a deep dive into why 2026 represents a rare entry window, see our analysis on why 2026 is the perfect entry point for first-time buyers in Toronto’s cooling market.
New Mortgage Rules Change the Math
Two major rule changes came into effect that dramatically improve affordability:
1. 30-Year Amortizations Are Now Available
First-time buyers and buyers of new construction can now access 30-year amortization mortgages, reducing monthly payments significantly compared to the old 25-year maximum.
2. Insured Mortgage Cap Raised to $1.5 Million
The insured mortgage cap has been raised from $1 million to $1.5 million. This is a game-changer for self-employed buyers and investors looking at higher-priced new homes. Our detailed breakdown of self-employed buyers and the new $1.5M insurable threshold explains how to qualify strategically.
The Rate Warning: Fixed Rates Are Rising
Here’s the complication in 2026: fixed mortgage rates are climbing. Escalating geopolitical tensions — including the Iran conflict — have pushed bond yields higher, which directly drives up fixed mortgage rates. Variable rates remain lower (the Bank of Canada held at 2.25% in March 2026), but the gap is narrowing.
This creates a real strategic decision for buyers. For a clear comparison of your options, read our analysis on fixed vs. variable rates for Toronto first-time buyers in 2026.
The bottom line: The HST savings can effectively offset rate increases, making this window genuinely attractive even in a rising-rate environment.
How Self-Employed Buyers and Investors Can Maximize the HST Savings
Self-Employed Buyers: Your Biggest Advantage in Years
If you’re self-employed and have been sitting on the sidelines because qualifying felt impossible, 2026 changes that calculus. The combination of:
- HST removal (saving up to $130,000 on new construction)
- Insured mortgage cap at $1.5 million
- 30-year amortization reducing monthly obligations
- Buyer’s market pricing
…creates a stacking effect that may not repeat itself. Our guide to self-employed Toronto mortgage affordability in 2026 walks through qualification strategies in detail.
The key for self-employed buyers is documentation. Lenders want to see at minimum two years of Notice of Assessments (NOAs) and T1 Generals. Some lenders offer stated-income or business-for-self programs that use bank statements instead. Work with a mortgage broker who specializes in self-employed files — the difference in rate and approval odds is significant.
Real Estate Investors: A New Construction Play
For investors, the HST removal on new builds fundamentally changes the math on pre-construction purchases. Previously, HST was one of the largest hidden costs in new construction investing. Removing it:
- Reduces acquisition cost by up to 13%
- Improves cap rates on rental properties
- Makes pre-construction assignments more attractive
Investors buying new rental properties qualify for the same HST relief as first-time buyers under the expanded eligibility rules. This is a meaningful policy shift worth acting on before March 31, 2027.
Practical Steps: How to Claim Your HST Savings
Here’s what you need to do to actually capture these savings:
Step 1: Confirm your purchase is new construction.
The rebate applies only to newly built homes — pre-construction condos, new freehold builds, and new rental properties. Resale is excluded.
Step 2: Sign your purchase agreement between April 1, 2026 and March 31, 2027.
The date of your signed Agreement of Purchase and Sale (APS) is what determines eligibility — not your closing date. This is critical for pre-construction buyers whose closings may fall in 2028 or later.
Step 3: Work with a mortgage broker early.
Given rising fixed rates and the complexity of stacking federal and provincial rebates, getting pre-approved now locks in your strategy. Explore your options through our complete guide to saving and buying your first home.
Step 4: Stack every available program.
Don’t leave money on the table. First-time buyers should be using:
- 🏠 Ontario HST removal (provincial portion)
- 🏠 Federal GST rebate / Bill C-4 relief
- 🏠 FTHB top-up rebate (for first-time buyers)
- 🏠 First Home Savings Account (FHSA) — up to $40,000 tax-free
- 🏠 RRSP Home Buyers’ Plan — up to $35,000 withdrawal
- 🏠 First-Time Home Buyer Tax Credit — $10,000 non-refundable credit
For a full breakdown of the tax credit, see our comprehensive guide to the First-Time Home Buyer Tax Credit in Canada.
Step 5: File your rebate application with the CRA.
The CRA administers the rebate. Your lawyer will typically handle this at closing, but confirm this with your real estate lawyer in advance. Review our guide to legal fees for Toronto homebuyers so there are no surprises at closing.
Step 6: Avoid common first-time buyer mistakes.
Even with massive tax savings available, buyers still make costly errors. Review the most common first-time home buyer mistakes before you sign anything.
Development Charges Are Also Being Cut
One more piece of good news that often gets overlooked: alongside the HST removal, Ontario is cutting development charges across the province by up to 50%. Development charges are fees builders pay municipalities to fund infrastructure — and they are always passed on to buyers in the purchase price.
Lower development charges mean builders can price new homes lower, which compounds the savings from the HST removal. This is a structural improvement to new home affordability, not just a temporary tax rebate.
Conclusion: The Window Is Open — But It Won’t Stay Open Long
Ontario removes HST on new homes in 2026, and first-time buyers in Toronto can save up to $50,000 — and often much more — when you combine provincial and federal relief. But this is a one-year window. Purchase agreements must be signed by March 31, 2027.
Layered on top of 5-year-low prices, a buyer’s market with strong negotiating power, 30-year amortizations, and a raised insured mortgage cap, the case for buying new construction in Toronto right now is genuinely compelling — for first-time buyers, self-employed professionals, and investors alike.
Your actionable next steps:
- ✅ Get pre-approved with a mortgage broker who understands the new rules
- ✅ Confirm your target property is new construction (not resale)
- ✅ Open or maximize your FHSA before purchasing
- ✅ Sign your APS before March 31, 2027
- ✅ Work with a real estate lawyer experienced in HST rebate applications
- ✅ Compare fixed vs. variable rates given current bond yield pressures
The combination of tax savings, market conditions, and improved financing rules is rare. The buyers who move decisively in this window will look back on 2026 as the year they got in at exactly the right time.
Contact our team at Everything Mortgages to get your personalized pre-approval strategy and make sure you capture every dollar of savings available to you.