The federal government tabled legislation to amend the Excise Tax Act so that first-time homebuyers can now obtain a GST rebate on newly constructed homes priced at or under $1 million. GST would be lowered on homes between $1 million and $1.5 million.

While residential builders have long advocated for these changes, some associations are urging the government to extend the measure to all home buyers and base it on closing date, not date of purchase and sale. The Canadian Home Builders’ Association is recommending that the relief benefit all buyers of new construction, as well as accessory dwelling units and secondary suites to help meet housing targets and restore affordability.

“For years, CHBA has been advocating for a change to the GST thresholds on new construction homes to help address housing affordability challenges in regions across the country, and this measure is a very positive step forward for Canadians,” said CHBA CEO Kevin Lee. “Previously, without details around the implementation of this measure, Canadians wishing to enter the housing market were holding out on buying a new construction home, which results in fewer home starts, so it is encouraging that today first-time buyers can have the confidence to move forward.”

Updates to the GST New Housing Rebate thresholds haven’t changed since GST was  introduced in 1991. Despite new home prices increasing substantially since then, the thresholds have never been adjusted by any government since.

The CBHA has been warning about the widening housing supply gap. The rising cost of construction, skyrocketing development charges in Canada’s major urban centres, mortgage rates remaining higher than inflation, and ongoing economic uncertainty due to the trade war with the U.S. have made it difficult for well-qualified buyers to purchase new homes, which has in turn, impacted builders’ ability to build.