If you are buying a new build in Ontario, the HST rebate is one of the most misunderstood lines on your purchase agreement. Builders often advertise prices "inclusive of rebate," which means the rebate has already been assumed and credited. And if you don't qualify for it, you're on the hook to repay the difference.
Here is how the rebate actually works in 2026.
Update — June 2026: The enhanced rebate is now fully in force. The federal and Ontario regulations were made in June 2026, retroactive to April 1, 2026, and the CRA expects updated claim forms by mid-July 2026. For the complete picture — who qualifies, how much you get back, every key date, and how to claim — see our complete 2026 guide to Ontario's HST rebate on new homes.
Update — May 2026: Ontario's expanded HST New Housing Rebate is now law. Bill 114, the HST Relief Implementation Act (Residential Property Rebates), 2026, received Royal Assent on May 12, 2026. For agreements of purchase and sale signed between April 1, 2026 and March 31, 2027, the rebate on a qualifying new home can reach 100% of the HST — up to $80,000 on the provincial (8%) portion, plus Ontario-funded relief equal to the 5% federal portion — for combined savings of up to roughly $130,000 on homes valued up to $1 million (phasing down above that, to a $24,000 floor by $1.85 million). This is a temporary enhancement, and the federal HST regulations needed to credit the provincial portion at closing have not been made yet — so for now buyers typically pay the HST at closing and apply to the CRA afterward. The separate Ontario First-Time Home Buyers' Rebate announced in October 2025 is a different program and remains outstanding. Run your own numbers with our HST rebate calculator.
Two Rebates, Not One
The HST rebate on new housing has two components:
- Federal rebate. A partial rebate of the 5% federal GST portion of HST. Capped on homes priced over $350,000 and phased out completely at $450,000.
- Ontario rebate. A partial rebate of the 8% provincial HST portion. Capped at $24,000 regardless of home price.
The federal rebate phases out as price climbs. The Ontario rebate does not.
Owner-Occupied vs. Rental
Two flavours of rebate exist depending on how you use the home:
- New Housing Rebate. For buyers who will live in the home (or have an immediate family member live in it) as their primary residence.
- New Residential Rental Property Rebate. For buyers who will rent the home out long-term. You pay HST up front at closing and claim the rebate after closing.
If you are buying as an investment, you cannot claim the New Housing Rebate. Many buyers (and some builders) get this wrong, which leads to CRA reassessments years later.
Why the "Inclusive of Rebate" Pricing Matters
Most Ontario builders price homes as "inclusive of HST and rebate". Meaning they assume the buyer qualifies and credit the rebate into the price. The buyer signs a direction at closing to assign the rebate to the builder, who then claims it.
If you do not qualify (you bought it as an investment, you do not meet the residency requirements, you assigned the agreement) the builder bills you for the rebate amount at closing. Sometimes a $24,000+ surprise.
Separately: the First-Time Home Buyer Rebates
Don't confuse the enhanced rebate above with the first-time-buyer programs, which are separate and still in progress. Federal Bill C-4 would give eligible first-time buyers of new homes up to $1 million an additional rebate of up to $50,000 of the federal GST, on top of the existing New Housing Rebate. Ontario announced a matching first-time-buyer rebate on the provincial (8%) portion in October 2025. Both of these first-time-buyer measures remain outstanding — they are not the same as the now-enacted Bill 114 enhancement. We track the federal bill's progress in our Bill C-4 update.
What to Do Before You Sign
- Read your Agreement of Purchase and Sale carefully for any HST and rebate clauses. Most builder agreements include language assigning the rebate.
- Confirm your status. Will you actually move in? Is the rebate assumption in the contract accurate for your situation?
- Get a lawyer to review before you sign. New-build agreements are highly skewed toward the builder and HST clauses are usually the most punitive.
If you have a builder agreement in hand and want to know exactly what HST will cost you at closing, get a free quote. We read every builder amendment and flag the HST exposure before you sign.
Common questions
What does "price inclusive of HST rebate" mean on a new build?
It means the builder has assumed you qualify for the HST new housing rebate and has already credited it into the purchase price. At closing, you sign a direction assigning the rebate to the builder, who then claims it. If you do not actually qualify, the builder bills you the difference.
Can the builder charge me back the HST rebate at closing?
Yes. If the price assumed you qualify and you do not — you bought as an investment, you will not meet the residency requirements, or you assigned the agreement — the builder bills you the rebate amount at closing. That surprise can run to $24,000 or more.
Can I claim the HST new housing rebate if I plan to rent out the home?
No. The New Housing Rebate is only for buyers who will live in the home, or have an immediate family member live in it, as their primary residence. Landlords use the separate New Residential Rental Property Rebate instead: you pay the HST up front at closing and claim the rebate afterward.
What should my lawyer check in a builder agreement before I sign?
The HST and rebate clauses, first. Your lawyer should confirm whether the price assumes the rebate, whether the assignment language matches your actual plans for the home, and what you owe if that assumption is wrong. New-build agreements are heavily skewed toward the builder, and the HST clauses are usually the most punitive.
Is the enhanced HST rebate the same as the first-time home buyer rebate?
No. They are separate programs. The enhanced rebate under Ontario's Bill 114 is now law and fully in force. The federal first-time buyer rebate under Bill C-4, worth up to $50,000 of the federal GST, and Ontario's matching first-time-buyer rebate announced in October 2025 both remain outstanding.
About the author: Christian Janisse is a licensed Ontario real estate lawyer and the founder of Simplyclose Law Professional Corporation. He acts for buyers, sellers, and lenders on purchases, sales, refinances, and title transfers across Ontario — in person in Windsor and remotely province-wide.