On March 25, 2026, Premier Doug Ford announced what the Ontario Home Builders' Association has called "the biggest announcement we've seen in home building in decades." As part of the 2026 Ontario Budget, tabled by Finance Minister Peter Bethlenfalvy on March 26, the province is proposing to temporarily eliminate the full 13 per cent Harmonized Sales Tax (HST) on eligible new homes valued up to $1 million delivering up to $130,000 in combined federal and provincial savings to qualifying buyers.

Certainly a pretty large potential, if temporary, shift in the costs buyers face in Ontario.  This announcement is the result of policy positions, both of the federal and provincial governments, that hopes to spur new construction.  How successful this will be remains to be seen. 

Nevertheless, let's see what we know so far and at the same time take a look at some concrete examples of exactly how much savings there will be over various price points.

What Exactly Was Announced?

The Ontario government is proposing to enhance the existing provincial HST New Housing Rebate and New Residential Rental Property Rebate for one year, from April 1, 2026 to March 31, 2027. The province will fully rebate its 8 per cent portion of the HST on qualifying new homes priced up to $1 million which will represent up to $80,000 in provincial savings alone.

The federal government for it's part has agreed to bring legislation (i.e. they intend to in short order) to cost-share with the province and cover "approximately" the federal 5 per cent portion of the HST, bringing the combined potential rebate to $130,000 on a $1 million new home.

This expanded rebate applies to all eligible buyers, so not just first-time purchasers. Repeat buyers purchasing a new home as their primary residence, and certain investors purchasing new homes for long-term residential rental purposes, are also eligible. This is pretty notable expansion from the earlier first-time-buyer-only program announced in October 2025.

So far so good.  Now how will this work?

The Rebate Structure

The rebate operates across four tiers, let's call them, based on the pre-tax purchase price of the new home:

• Homes valued up to $1 million: The full 13 per cent HST is rebated. This means on a $1 million home, buyers could receive the maximum rebate of $130,000. On a $750,000 home, the full HST of $97,500 would be returned.
• Homes valued between $1 million and $1.5 million: The maximum rebate of $130,000 is maintained as a flat amount, regardless of the home's value within this range. Although the HST charged increases with the price, the rebate remains capped at $130,000.
• Homes valued between $1.5 million and $1.85 million: The rebate declines proportionally from $130,000 down to $24,000. At $1.5 million, buyers receive $130,000. At $1.85 million, buyers receive $24,000. The reduction is applied on a linear basis across this range.
• Homes valued at $1.85 million and above: Buyers receive the existing provincial HST rebate of $24,000,(so not the federal)  unchanged from the current program.

Actual Examples: How Much Will You Save?

One point of confusion is seeing how the numbers work at different price points.  Stick with me.   

For this post I wanted to look at examples staring at $500,000 them moving up by $250,000 until $2,500,000.  The goal was to show the HST that would normally be charged, the new rebate amount, and how this compares to what was available under the previous rules.

(Under the previous system, the combined federal and provincial rebates for most homes above $450,000 totaled approximately $24,000 ( the maximum provincial rebate ) since the federal new housing rebate phases out entirely between $350,000 and $450,000 in purchase price anyway). 

$500,000 new home:The HST on this property would be $65,000. Under the new program, the entire $65,000 is rebated. Under the old rules, the buyer would have received approximately $24,000 in total rebates. The additional savings under the new program: approximately $41,000

$750,000 new home: HST of $97,500, fully rebated under the new rules. Compared to the old rebate of roughly $24,000, this delivers approximately $73,500 in additional savings.

$1,000,000 new home: HST of $130,000, fully rebated. The improvement over the old system: approximately $106,000 in additional savings.

$1,250,000 new home: HST of $162,500, with a capped rebate of $130,000. The buyer still pays $32,500 in HST, but saves approximately $106,000 more than under the previous rules.

$1,500,000 new home: HST of $195,000, with the full $130,000 rebate still applying. The buyer pays $65,000 in net HST. Additional savings over the old rules: approximately $106,000.

$1,750,000 new home: This falls in the declining tier. The rebate is approximately $53,714 (calculated on a linear basis -think grade 9 math and a straight line- between the $130,000 available at $1.5 million and the $24,000 floor at $1.85 million). Additional savings over the old rules: approximately $29,714.

$2,000,000 new home: At this price point, the home exceeds the $1.85 million threshold. The buyer receives the existing $24,000 provincial rebate — no change from the current program.

$2,500,000 new home: Exact same as above right? The $24,000 existing rebate applies. No additional benefit under the new program.

Easy right?  The simplest way to look at this is to think of these two take aways:      

1. The greatest benefit goes to buyers looking at or below $1.5 million, where the rebate reaches its maximum of $130,000.

2.  Above $1.85 million, the new program offers no additional savings whatsoever.

Is This In Effect Now?

Now that that was cleared up, on to the next question confusing people:  Is this in effect or not? 

The province has announced that the enhanced rebate applies to purchase agreements signed between April 1, 2026 and March 31, 2027. 

However, there is a critical piece missing.  Both the provincial and federal components of this rebate require amendments to something called the federal Excise Tax Act. There is a great piece from Osler, Hoskin & Harcourt LLP, which you can find here, who note that, the Ontario government announcing this policy without a concurrent press release from the federal government (remember the joint DC announcement a few days ago), is unusual. While the federal government has agreed "approximately" to cover the federal 5 per cent portion, the necessary federal legislation has not yet received Royal Assent.

In practical terms, this means the new rebate structure is announced and the eligibility window opened today, but the whole necessary legal framework for the full 13 per cent rebate has not been enacted.

In English?  We are missing the federal part in law.

Buyers signing purchase agreements now are doing so on the reasonable expectation that the legislation will be passed. They do so on the strength of the fact that both Ontario and the federal government have publicly committed to this cost-sharing arrangement.  

Who and what qualify?

To qualify for the new rebate, buyers must meet the following conditions as outlined by the Ontario government:

• The home must be a newly built property and includes detached houses, semi-detached homes, townhouses, rowhouses, and condos. The APS with the builder must be signed between April 1, 2026 and March 31, 2027.
• For homes purchased as a primary residence, construction must begin on or before December 31, 2028, and the home must be substantially completed on or before December 31, 2031.
• For homes purchased as residential rental properties (where construction began before March 31, 2026), the purchase agreement must be signed during the eligibility window and the home must be substantially completed by December 31, 2029.

Why This Matters for Ontario

This policy arrives at an important moment for Ontario's housing market. According to CMHC's 2026 Housing Market Outlook, Ontario is the only region in Canada expected to see price declines in 2026. Housing starts in the province are projected to fall to near two-decade lows.  Granted this is driven by the collapse in preconstruction condominium sales in the Greater Toronto Area, but the benefits of the rebates are province wide.

Scott Andison, CEO of the Ontario Home Builders' Association had this to say in the OHBA's press release in the Globe found here:

“With affordability challenges sidelining many potential buyers and new home sales slowing across the province, today’s announcement provides meaningful relief for homebuyers and much-needed support for Ontario’s residential construction sector, professional renovation industry, and their workers to restore the pipeline of much needed new homes across the province,”

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