Ontario Removes HST on New Homes: How to Save Up to $130,000 Starting April 1
Ontario and Ottawa are eliminating the full 13% HST on new homes under $1 million for one year. Here's exactly how much you'll save, who qualifies, and how to time your purchase for maximum benefit.
By Refdesk Team
What This Means for You
If you have been waiting for the right moment to buy a newly built home in Ontario, that moment may have just arrived. Starting April 1, 2026, the full 13% Harmonized Sales Tax will be eliminated on new homes priced under $1 million — and significant relief extends to homes up to $1.85 million. This is not a rebate you apply for after closing. It is a removal of the tax at the point of sale, which means lower purchase prices, smaller mortgage amounts, and less interest paid over the life of your loan.
Based on our analysis, this is the single largest tax incentive for Ontario homebuyers in at least a decade, and it is available to all buyers — not just first-time purchasers. Here is our detailed breakdown of what this means for your finances, with calculations at every price point.
If You're Buying a New Home Under $1 Million
Your savings are straightforward: The full 13% HST disappears from your purchase price.
| New Home Price | HST You No Longer Pay | Effective Price |
|---|---|---|
| $400,000 | $52,000 | $400,000 (was $452,000) |
| $500,000 | $65,000 | $500,000 (was $565,000) |
| $600,000 | $78,000 | $600,000 (was $678,000) |
| $700,000 | $91,000 | $700,000 (was $791,000) |
| $800,000 | $104,000 | $800,000 (was $904,000) |
| $900,000 | $117,000 | $900,000 (was $1,017,000) |
| $999,999 | $130,000 | $999,999 (was $1,129,999) |
How we calculated this: New homes in Ontario are subject to HST at 13% (8% provincial + 5% federal). Previously, partial rebates reduced the effective HST burden, but the new program eliminates the tax entirely for homes under $1 million. The savings figures above represent the full 13% of the pre-tax purchase price.
Important detail: These savings figures assume no existing rebates. Under the old system, buyers of homes under $450,000 could claim partial HST rebates of up to approximately $30,000. So if you were already eligible for the old rebate, your incremental savings are still substantial — but somewhat less than the headline figure. For a $400,000 home, the incremental savings over the old rebate system would be approximately $22,000 to $30,000 depending on your specific rebate eligibility.
If You're Buying Between $1 Million and $1.5 Million
For homes priced between $1 million and $1.5 million, you receive a flat $130,000 HST reduction. This means:
| New Home Price | HST Reduction | Effective HST Rate |
|---|---|---|
| $1,000,000 | $130,000 | 0% |
| $1,100,000 | $130,000 | ~2.2% |
| $1,200,000 | $130,000 | ~4.2% |
| $1,300,000 | $130,000 | ~5.7% |
| $1,500,000 | $130,000 | ~7.0% |
If You're Buying Between $1.5 Million and $1.85 Million
The tax reduction declines on a sliding scale from $130,000 down to the existing $24,000 provincial rebate amount. The higher your purchase price in this range, the smaller your benefit — but it is still significantly better than the current system.
Mortgage Impact: The Hidden Savings
The real power of this change goes beyond the sticker price. When HST is removed, your mortgage amount drops, which means you pay less interest over the life of the loan.
Example scenario: A buyer purchasing a $700,000 new home with 20% down:
- Old system: Purchase price with HST approximately $791,000. Mortgage after 20% down: ~$632,800
- New system: Purchase price $700,000. Mortgage after 20% down: $560,000
- Mortgage difference: $72,800 less borrowed
- Interest savings over 25 years at 4.5%: Approximately $50,000 in additional savings
That brings your total benefit to roughly $141,000 — the $91,000 in HST you did not pay, plus approximately $50,000 in interest you will never be charged.
Who Qualifies
Based on the announced program details, here are the eligibility requirements:
You qualify if:
- You are purchasing a newly constructed home in Ontario
- The agreement of purchase and sale is signed between April 1, 2026 and March 31, 2027
- You are any buyer — first-time or repeat. This is not limited to first-time purchasers
You do NOT qualify if:
- You signed your purchase agreement before April 1, 2026 (even if closing is after that date)
- You are buying a resale (existing) home — this applies only to new construction
- You are buying outside Ontario
Critical timing note: If you have already signed a purchase agreement for a new build that has not yet closed, this program does not apply to you. Only agreements signed on or after April 1, 2026 qualify. We recommend consulting your real estate lawyer about your specific situation.
How This Differs from the Federal Bill C-4 GST Rebate
This Ontario HST removal is separate from — and stacks with — the federal changes under Bill C-4, which received Royal Assent on March 12, 2026. Here is how they compare:
| Feature | Bill C-4 (Federal) | Ontario HST Removal |
|---|---|---|
| Tax affected | 5% GST only | Full 13% HST (provincial + federal) |
| Eligibility | First-time buyers only | All buyers |
| Price cap | Homes under $1 million | Tiered: full relief under $1M, partial to $1.85M |
| Duration | Permanent | One year (April 2026 – March 2027) |
| Geography | All of Canada | Ontario only |
For Ontario first-time buyers under $1 million: The Ontario program effectively supersedes Bill C-4 during its one-year window, since it removes the entire 13% HST (which includes the 5% GST). After the Ontario program expires, Bill C-4's permanent GST elimination continues to apply.
Immediate Action Steps
If you're actively house hunting:
- Contact your builder or developer now to understand how they will implement the HST removal on April 1
- Do NOT sign a purchase agreement before April 1, 2026 — waiting even a few days could save you tens of thousands of dollars
- Get mortgage pre-approval based on the lower (no-HST) price to understand your true budget
If you're considering new construction:
- Research new-build developments in your target area at ontario.ca/newconstruction or through the Ontario Home Builders' Association at ohba.ca
- Factor in the one-year window — you need to sign your purchase agreement before March 31, 2027
- Remember that closing can happen after the window ends; it is the signing date that matters
If you already signed before April 1:
- Consult a real estate lawyer about whether any contract provisions allow you to benefit
- Check whether your builder is offering any voluntary price adjustments
The News: What Happened
On March 25, 2026, Ontario Premier Doug Ford announced that the province will eliminate the full 13% Harmonized Sales Tax on newly built homes priced under $1 million, according to CBC News. The measure takes effect April 1, 2026 and runs for one year, until March 31, 2027.
According to CP24, the federal government has agreed to partner with Ontario to cover the federal 5% portion of the HST, making this a full 13% elimination rather than just the provincial 8% share. Ontario officials estimate the joint tax relief amounts to approximately $2.2 billion, as reported by BNN Bloomberg.
The Toronto Regional Real Estate Board (TRREB) called the move "a major step forward," according to a GlobeNewsWire release. The Ontario Home Builders' Association and the Building Industry and Land Development Association jointly described it as "game-changing," noting it could stimulate an additional 8,000 housing starts and support up to 21,000 jobs, as reported by GlobeNewsWire.
The announcement comes one day before the Ontario government tables its 2026 budget on March 26, according to CBC News. Finance Minister Peter Bethlenfalvy has indicated the budget will focus on economic competitiveness and infrastructure amid ongoing uncertainty from U.S. trade tensions.
Analysis: Why This Matters
Based on our analysis, this announcement represents a significant shift in Ontario's approach to housing affordability. For nearly a decade, housing policy in Canada has focused primarily on demand-side measures — mortgage rule changes, foreign buyer taxes, and speculation levies. This HST removal is a supply-side stimulus designed to make new construction more financially viable for both buyers and builders.
The Economic Context
Ontario's construction sector has been under significant pressure. According to the Bank of Canada's March 2026 monetary policy statement, Canada's GDP contracted by 0.6% in the fourth quarter of 2025, and the unemployment rate rose to 6.7% in February 2026. The construction industry, already affected by U.S. tariffs on steel and aluminum, has seen housing starts decline across the province.
By removing HST on new homes, Ontario is attempting to accomplish two things simultaneously: make homeownership more accessible for buyers, and create enough demand to keep builders working through an economic downturn.
The One-Year Window: Strategic Implications
The fact that this is a one-year program creates urgency — which is likely intentional. Builders and buyers who have been sitting on the sidelines now have a clear deadline to act. Based on historical patterns with similar time-limited incentives, we expect a surge in new-build purchase agreements in the coming months, particularly in the spring and summer of 2026.
However, this urgency also creates risk. Buyers should not rush into purchases simply to capture the tax savings without conducting normal due diligence on the property, the builder's reputation, and their own financial readiness.
What Happens Next
The Ontario budget tabled on March 26 will likely contain the legislative details for this program. We expect to see specifics on how the federal-provincial cost-sharing works, any additional eligibility requirements, and the mechanism for applying the tax removal at closing.
Your Action Plan
Immediate (This Week):
- Review your finances and determine if buying a new home in the next 12 months is realistic for your situation
- Get mortgage pre-approval from your bank or mortgage broker — rates are currently around 4.0-4.5% for fixed terms
- Research new-build developments in your target area through ohba.ca or your local home builders' association
Short-term (April – May 2026):
- Compare at least 3 new-build developments before committing to any purchase
- Hire a real estate lawyer experienced in new construction purchases
- Review Tarion warranty coverage for your province at tarion.com — all new homes in Ontario are covered
Long-term (Before March 2027):
- If planning to buy, ensure your purchase agreement is signed before March 31, 2027 to qualify
- Monitor Ontario budget details for any additional housing incentives announced on March 26
- Track interest rate decisions from the Bank of Canada — currently at 2.25% — as further cuts could compound your savings
Other Perspectives
Government Position:
Premier Doug Ford stated the HST elimination "will make new homes far more affordable across Ontario," according to CBC News. The government frames this as both an affordability measure and an economic stimulus that will create thousands of construction jobs.
Real Estate Industry:
TRREB CEO John DiMichele called it "a major step forward for housing affordability," noting it addresses one of the largest cost barriers for new-home purchasers, according to a TRREB press release. The Ontario Home Builders' Association estimates 8,000 additional housing starts.
Opposition and Critics:
Housing advocates have cautioned that HST relief primarily benefits those already able to afford new homes, and does not address rental affordability or social housing shortages. The Ontario NDP has argued that more direct investment in affordable and social housing construction is needed alongside tax incentives.
Homebuyer Advocates:
Consumer groups have welcomed the initiative but warned buyers to be vigilant about builders absorbing savings through price increases rather than passing them to purchasers. Prospective buyers are advised to compare pre-announcement pricing to post-April pricing carefully.
Note: Including multiple perspectives does not imply all views are equally valid, but ensures readers can make informed judgments.
Corrections Policy
We strive for accuracy. If you find an error in this analysis, please email us at [email protected]. We will promptly investigate and correct any factual inaccuracies.
Updates:
- No corrections to date (as of March 25, 2026)
Sources
- CBC News, "Province planning to remove HST on new homes for 1 year," March 25, 2026
- CP24, "Ontario budget to be tabled March 26," March 2026
- BNN Bloomberg, "Ontario and Ottawa to remove HST on new homes," March 25, 2026
- GlobeNewsWire / TRREB, "HST Elimination for all Buyers of New Housing is a Major Step Forward," March 25, 2026
- GlobeNewsWire / OHBA and BILD, "OHBA and BILD applaud the game-changing reduction and elimination of HST on new homes in Ontario," March 25, 2026
- Bank of Canada, "Monetary Policy Decision," March 18, 2026
- DJB Chartered Professional Accountants, "HST Relief for New Home Purchases in Ontario," March 2026