Backgrounder | Enhancing Harmonized Sales Tax Relief on New Homes

The Ontario government is taking steps to temporarily relieve the Harmonized Sales Tax (HST) on new homes valued up to $1 million and to temporarily reduce the HST on new homes between $1 million and $1.85 million.

The 13 per cent HST consists of an 8 per cent provincial portion and a 5 per cent federal portion.

The relief for the 8 per cent provincial portion of HST is expected to be implemented through temporary enhancements to Ontario’s existing New Housing Rebate (NHR) and New Residential Rental Property Rebate (NRRPR), which are rebates of the 8 per cent provincial portion of the HST relating to new and substantially renovated homes and residential rental properties.

Currently, under Ontario’s existing NHR and NRRPR, the maximum rebate for a home/rental unit is $24,000 (75 per cent of provincial portion of the HST on the first $400,000 of new home/rental unit value).

The enhanced Ontario NHR and NRRPR would provide for a rebate of 100 per cent of the provincial portion of the HST on eligible new homes and eligible rental units valued up to $1 million, for up to $80,000 in provincial relief per eligible new home/rental unit. This $80,000 maximum rebate amount would apply to eligible new homes and eligible rental units valued above $1 million and up to $1.5 million. For eligible new homes and eligible rental units valued between $1.5 million and $1.85 million, the maximum rebate amount would decrease in a linear manner until it reaches $24,000.

For new homes and rental units valued at or above $1.85 million, an Ontario NHR or NRRPR of $24,000 would be available.

Ontario would provide additional relief, equivalent to up to the full 5 per cent federal portion of the HST. Eligibility for this relief would match the eligibility requirements for the enhanced Ontario NHR and NRRPR, as generally described in this backgrounder. Administration of the provincial payments is subject to the enactment of provincial legislation and regulations.

The temporary enhancements to Ontario’s NHR and NRRPR for the 8 per cent provincial portion of the HST would need to be implemented by way of HST regulations made under the federal Excise Tax Act.

The enhanced Ontario NHR or NRRPR would generally apply to the same types of housing and follow the same eligibility conditions as the existing GST/HST New Housing Rebate and GST/HST New Residential Rental Property Rebate, subject to some additional conditions described in this backgrounder to reflect the temporary nature of the enhancements.

This backgrounder is intended to provide a description of when the enhanced Ontario NHR or NRRPR would be available in the most common situations.

As this backgrounder is not intended to describe every instance where an enhanced Ontario NHR or NRRPR may be available, interested parties may look at information on the existing GST/HST NHR and NRRPR for guidance.

Information regarding definitions and eligibility related to the GST/HST New Housing Rebate is available on the Canada Revenue Agency’s website: https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4028/gst-hst-new-housing-rebate.html

Information regarding definitions and eligibility related to the GST/HST New Residential Rental Property Rebate is available on the Canada Revenue Agency’s website:https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4231/gst-hst-new-residential-rental-property-rebate.html

Unless otherwise indicated, terms used in this backgrounder that are defined in the Excise Tax Act are intended to have the same meaning as in that Act.

Administration and enforcement of the GST/HST is the responsibility of the Canada Revenue Agency. This responsibility includes processing rebate applications and making rulings and interpretations on the application of the GST/HST. All individuals and businesses must deal directly with the Canada Revenue Agency for any of these or other administrative and enforcement issues.

Relief related to the 5 per cent federal portion of the HST will need to be implemented under provincial law. That relief is intended to be available in the same instances where an enhanced Ontario NHR or NRRPR for the 8 per cent provincial portion of the HST may be available, as generally described in this backgrounder. Details on the administration of the relief related to the 5 per cent federal portion of the HST will be made available at the earliest possible opportunity.

Disclaimer: This backgrounder is intended to provide information respecting a potential change to the 8 per cent provincial portion of the HST in the Province of Ontario under the Excise Tax Act (Canada). It is also intended to provide information respecting a potential change under Ontario law for the additional relief to be provided by Ontario. This should not be regarded as a replacement of the laws, regulations or administrative documents to which it refers.

Enhanced New Housing Rebate

As is the case with Ontario's existing NHR, situations in which an individual may be eligible for the enhanced Ontario NHR include:

the purchase of a new or substantially renovated home from a builder;
building or substantially renovating, or hiring someone else to build or substantially renovate, a home on land the individual owns or leases; or
the purchase of shares of a cooperative housing corporation.

Eligible home types generally include a detached or semi-detached single unit house, a duplex, a residential condominium unit, a townhouse, a rowhouse, a unit in a cooperative housing corporation, a mobile home (including a modular home), and a floating home.

As is the case with Ontario's existing NHR, the enhanced Ontario NHR is only applicable to homes for use as the individual’s primary place of residence or the primary place of residence of a “relation” of the individual.

New Homes Purchased from a Builder

The enhanced Ontario NHR would allow an individual to recover up to $80,000 of the provincial portion of the HST paid in respect of a new or substantially renovated home purchased from a builder.

If an individual would otherwise qualify for Ontario's existing NHR in respect of a home purchased from a builder, the enhanced Ontario NHR would generally be available if:

the agreement of purchase and sale for the home was entered into between the individual and the builder on or after April 1, 2026, and on or before March 31, 2027; and
the construction or substantial renovation of the home
- begins on or before December 31, 2028, and
- is substantially completed on or before December 31, 2031.

Owner-Built Homes

The enhanced Ontario NHR would allow an individual to recover up to $80,000 of the provincial portion of the HST they paid to build a home on land they own or lease or to substantially renovate their home.

If an individual would otherwise qualify for Ontario's existing NHR in respect of an owner-built home, the enhanced Ontario NHR would generally be available if the construction or substantial renovation of the home:

begins on or after April 1, 2026, and on or before March 31, 2027; and
is substantially completed on or before December 31, 2029.

Shares of a Cooperative Housing Corporation

The enhanced Ontario NHR would allow an individual to claim a rebate of up to $80,000 of the provincial portion of the HST paid in respect of the purchase of a share of a cooperative (co-op) housing corporation that entitles the individual to the possession of new or substantially renovated co-op housing.

If an individual would otherwise qualify for Ontario's existing NHR in respect of the purchase of a share of co-op housing corporation, the enhanced Ontario NHR would generally be available if:

the agreement of purchase and sale for the share was entered into between the individual and the co-op on or after April 1, 2026, and on or before March 31, 2027; and
the construction or substantial renovation of the home
- begins on or before December 31, 2028, and
- is substantially completed on or before December 31, 2031.

Interaction with Ontario First-Time Home Buyers’ Rebate

On October 28, 2025, Ontario announced its intention to offer a rebate of the full 8 per cent provincial portion of the HST for first-time home buyers on new homes.

An individual who would be eligible for the Ontario first-time home buyers’ rebate and for the enhanced Ontario NHR (e.g., a first-time home buyer that entered into an agreement of purchase and sale for a new home on or after April 1, 2026 and on or before March 31, 2027) would be permitted to claim either or both Ontario rebates, but the total amount of all Ontario rebates that may be claimed by any individuals in respect of a transaction would be limited to the maximum amount claimable under the enhanced Ontario NHR in respect of that transaction.

Enhanced New Residential Rental Property Rebate

As is the case with Ontario's existing NRRPR, situations where a person that is a landlord may be eligible for the enhanced Ontario NRRPR include:

the purchase of a new or substantially renovated residential complex to rent for long-term residential use from a builder; or
the building, or hiring someone else to build, a residential complex to rent for long-term residential use on land the person owns or leases.

The enhanced Ontario NRRPR would apply to a residential complex differently depending on whether the construction or substantial renovation of the residential complex begins on or before March 31, 2026, or on or after April 1, 2026.

Construction Begins on or Before March 31, 2026

The enhanced Ontario NHR may allow a person that purchases a new or substantially renovated residential complex that is a “single-unit residential complex” or a “residential condominium unit”, in respect of which construction or substantial renovation began on or before March 31, 2026, to recover up to $80,000 of the provincial portion of the HST paid in respect the purchase.

As is the case with Ontario's existing NRRPR, a “single-unit residential complex” would generally include a detached or semi-detached single unit house, a duplex, a townhouse or a rowhouse.

If the purchaser would otherwise qualify for Ontario's existing NRRPR in respect of a taxable supply by way of sale of a residential complex (other than a supply deemed under section 191 of the federal Excise Tax Act to have been made and received), the enhanced Ontario NRRPR would generally be available in respect of the residential complex if:

the residential complex is a “single-unit residential complex” or a “residential condominium unit”;
the construction or substantial renovation of the residential complex began on or before March 31, 2026;
the agreement of purchase and sale for the residential complex was entered into with the builder on or after April 1, 2026, and on or before March 31, 2027; and
the construction or substantial renovation of the residential complex is substantially completed on or before December 31, 2029.

Construction Begins on or After April 1, 2026

The enhanced Ontario NRRPR may allow a person that purchases or builds a residential complex, or an addition to a residential complex, in respect of which construction or substantial renovation begins on or after April 1, 2026, to recover up to $80,000 of the provincial portion of the HST in respect of each eligible rental unit that forms part of the residential complex.

If the person would otherwise qualify for Ontario's existing NRRPR in respect of a residential complex or addition to a residential complex, the enhanced Ontario NRRPR would generally be available in respect of the residential complex if the construction or substantial renovation:

begins on or after April 1, 2026 and on or before March 31, 2027; and
is substantially completed on or before December 31, 2029.

Land Leased for Residential Purposes

Consistent with the existing Ontario NRRPR, certain leases of land for residential purposes would be eligible for an enhanced Ontario NRRPR with modified thresholds compared to those applicable to other transactions eligible for the enhanced relief.

The enhanced Ontario NRRPR for leased land would generally provide for a rebate of up to $26,400 (e.g., 100 per cent of the 8 per cent provincial portion of the HST for certain leases of land for residential purposes with a fair market value up to $330,000). This $26,400 maximum rebate amount would be maintained for certain leases of land for residential purposes (based on a fair market value above $330,000 and up to $495,000).

The $26,400 maximum rebate amount would decrease in a linear manner for certain leases of land for residential purposes (fair market value between $495,000 and $610,500) until it reaches $7,920. For land leased for residential purposes with a fair market value above $610,500, a rebate of up to $7,920 would continue to be available.

A person may be eligible for the rebate if they make an exempt supply of land that results in a deemed supply and that is:

A lease of land, other than a site in a residential trailer park, that provides continuous possession for a person in occupation or possession of a residential unit affixed to that land and used as a place of residence for individuals.
A lease of a site in a residential trailer park for a person in occupation or possession of a mobile home, travel trailer, motor home or similar vehicle or trailer.

The deemed supply must be made on or after April 1, 2026 and on or before March 31, 2027.

Tax Payable By

For both the enhanced Ontario NHR and the enhanced Ontario NRRPR, tax would need to become payable no later than December 31, 2032.

Assignment Sales

If, under an assignment sale, a person (the assignee) assumes the rights and obligations of another person that is a purchaser of a new home (the assignor) under an agreement of purchase and sale with a builder, an enhanced Ontario NHR or NRRPR would only be available if:

Both the original agreement of purchase and sale and the assignment agreement were entered into on or after April 1, 2026 and on or before March 31, 2027; and
All other eligibility criteria in relation to the rebate’s application to the specific transaction are met.

Limitations

Specific rules would limit the availability of the enhanced Ontario rebates in certain circumstances to ensure that the enhanced Ontario rebates apply as intended. These rules would be similar to rules that accompanied the introduction of the GST/HST First Time Home Buyers’ Rebate.

Claiming an Enhanced Rebate for the 8 per cent Portion of the HST

When you purchase a new home from a builder, the builder may pay or credit the total amount of certain GST/HST rebates, including the existing GST/HST NHR and the existing Ontario NHR, that you are entitled to claim, directly to you so that you do not have to apply to the Canada Revenue Agency directly and wait to receive your rebate.

Builders will not be able to pay or credit the enhanced Ontario NHR for homes where GST/HST becomes payable before federal regulations that would be necessary to implement the enhanced Ontario NHR are made.

The builder would not be able to credit the enhanced Ontario NRRPR (as is the case with the existing GST/HST NRRPR and Ontario NRRPR).

If GST/HST becomes payable before such federal regulations are made, eligible purchasers will need to:

pay the GST/HST at closing; and
apply for the enhanced Ontario NHR directly with the Canada Revenue Agency after federal regulations that implement the enhanced Ontario NHR are made.

In any case, an eligible purchaser or builder of a residential property will be able to apply for the enhanced Ontario NHR or NRRPR with the Canada Revenue Agency after federal regulations that would be needed to implement it are made.

It is expected that the Canada Revenue Agency would release updated rebate application forms for the enhanced Ontario NHR and NRRPR some time after federal regulations are made.

Claiming Provincial Relief Related to the 5 per cent Portion of the HST

Relief related to the 5 per cent federal portion of the HST will need to be implemented under provincial law. Details on the administration of the relief related to the 5 per cent federal portion of the HST will be made available at the earliest possible opportunity.

Updated: May 5, 2026

Published: March 26, 2026

Backgrounder: Enhancing Harmonized Sales Tax Relief on New Homes