In March 2026, Ontario announced what may be the most aggressive housing tax eliminating up to 13% HST on new homes, such as a newly built home or a newly build residential condominium unit. On paper, that’s a potential savings of up to $130,000. This temporary measure is designed to enhance housing affordability by expanding the amount of provincial HST relief available on eligible new home purchases, while maintaining the existing rebate structure and eligibility criteria. The Ontario Enhanced New Housing Rebate (ENHR) can provide eligible purchasers with relief of up to $80,000 of the 8% provincial portion of the HST. In addition, purchasers who qualify for the Enhanced Rebate may also be eligible for the new Ontario New Home Affordability Payment (ONHAP) of up to $50,000, providing relief in respect of the 5% federal portion of the HST. Together, these measures can substantially reduce the HST cost of purchasing a qualifying new home in Ontario.
The Enhanced Rebate is a temporary measure with a limited eligibility window. For purchases from a builder, the Agreement of Purchase and Sale must be entered into between April 1, 2026 and March 31, 2027. This makes the date the agreement is signed particularly important, as purchasers who enter into an agreement outside this one-year period may not qualify for the enhanced rebate, even if the other qualification criteria otherwise meet the program requirements.
What Is the Ontario Enhanced New Housing Rebate?
The Ontario Enhanced New Housing Rebate is a temporary enhancement to the existing Ontario New Housing Rebate. Under the existing program, “Legacy Rebate”, the Ontario rebate is generally capped at $24,000. ( Need to send a link to the other article about Legacy rebate HST ) The Enhanced Rebate increases the potential provincial HST relief to as much as $80,000 for qualifying homes.
The program applies primarily to purchasers who enter into an Agreement of Purchase and Sale with a builder on or after April 1, 2026 and on or before March 31, 2027.
For a home purchased from a builder, the following additional requirements generally apply:
- construction or substantial renovation must begin on or by December 31, 2028;
- construction or substantial renovation must be substantially completed on or by December 31, 2031;
- the purchase consideration must be less than $1,850,000;
- the HST must become payable by December 31, 2032; and
- the home must be acquired for use as the purchaser’s or a qualifying relation’s primary place of residence.
How Much Is the Enhanced Rebate?
The amount of the rebate depends on the value of the home.
| New Home Value | Ontario Provincial HST Rebate |
| Up to $1,000,000 | 100% of the 8% provincial portion of HST paid, up to $80,000 |
| Over $1,000,000 to $1,500,000 | $80,000 |
| Over $1,500,000 but under $1,850,000 | Partial rebate |
| $1,850,000 or more | No Enhanced Rebate; existing Ontario rebate of up to $24,000 may still apply |
One important point is that the $80,000 is a maximum rebate, not an automatic rebate. For homes under $1 million, the rebate cannot exceed the actual 8% provincial portion of the HST paid or payable. For example, if the applicable provincial portion of HST on a qualifying home is $72,000, the purchaser does not receive $80,000—the rebate would be limited to $72,000. For homes priced above $1 million and up to $1.5 million, the Enhanced Rebate is generally a flat $80,000. For homes above $1.5 million, the Enhanced Rebate begins to phase out and is no longer available once the applicable value reaches $1.85 million.
The Additional Ontario New Home Affordability Payment
The Enhanced Rebate is only part of the new relief available. Since HST in Ontario consists of an 8% provincial portion and a 5% federal portion, the Province of Ontario is working with the federal government to provide additional relief by funding the federal portion of the HST through this program. A purchaser who qualifies for the Ontario Enhanced New Housing Rebate may also qualify for the Ontario New Home Affordability Payment (ONHAP).
The ONHAP provides up to $50,000, equivalent to as much as 100% of the 5% federal portion of the HST. This means that, in the appropriate circumstances, a qualifying purchaser may receive relief in respect of both the provincial and federal portions of the HST.
However, the ONHAP is reduced by the federal portion of any GST/HST New Housing Rebate or First-Time Home Buyers’ GST/HST Rebate for which the purchaser is eligible. A first-time buyer who qualifies for the federal First-Time Home Buyers’ GST/HST Rebate must claim that rebate first, with the ONHAP potentially covering the remaining eligible federal HST amount.
Unlike the Enhanced Rebate, the ONHAP is administered by the Province of Ontario, although the CRA facilitates the process by sharing the necessary information with Ontario where the purchaser provides consent on the applicable rebate application.
You Do Not Have to Be a First-Time Homebuyer
Unlike under the federal program, First-Time Home Buyers’ GST/HST Rebate, the purchase must be a first-time home buyer to qualify for a rebate. An important feature of the Ontario Enhanced New Housing Rebate is that it is not limited to first-time homebuyers. A purchaser may qualify even if they have previously owned a home, provided the applicable rebate requirements are satisfied. The key occupancy requirement is that the new home be acquired for use as the primary place of residence of the purchaser or a qualifying relation. This distinction is important because the Enhanced Rebate should not be confused with the separate federal and Ontario rebates specifically available to qualifying first-time homebuyers.
The New Housing Rebate is available only to individuals who satisfy the applicable eligibility requirements. Where a property is purchased by more than one owner, all registered owners must be individuals. A purchaser will not qualify for the New Housing Rebate if the property is co-owned with a corporation or partnership. Corporations and partnerships are not eligible to claim the New Housing Rebate. Different rules apply to qualifying rental properties under the New Residential Rental Property Rebate program.
What Types of Homes Can Qualify?
Subject to the applicable conditions, the Enhanced Rebate may be available for:
- newly constructed homes purchased from builders;
- new condominium units;
- substantially renovated homes;
- qualifying owner-built homes;
- certain homes situated on leased land; and
- qualifying cooperative housing arrangements.
For owner-built homes and substantial renovations, different timing and valuation requirements apply.
Investors Should Be Careful
The Ontario Enhanced New Housing Rebate described here is intended for homes acquired for use as the purchaser’s or a qualifying relation’s primary place of residence. Accordingly, a purchaser acquiring a new condominium or house strictly as an investment property should not assume that the Enhanced New Housing Rebate applies. The CRA has indicated that separate guidance concerning the Ontario Enhanced New Residential Rental Property Rebate is expected. Purchasers buying new construction for rental purposes should therefore obtain advice based on the rental rebate rules applicable to their particular transaction.
This distinction is important because similarly to the Legacy Rebate, the investor would have to bring in the HST payable on closing and file for rebate after the deal closes. Requiring investors to fund the HST out-of-pocket on closing, only to recover it through a rebate after closing, creates a significant upfront financial burden and arguably undermines the very objective of making new housing more affordable and encouraging investment in the housing supply.
What About Assignment Sales?
Where a purchaser acquires a new home by assignment, both the original Agreement of Purchase and Sale, and the Assignment Agreement must generally have been entered into on or after April 1, 2026 and on or before March 31, 2027.
This means that an assignee generally cannot obtain the Enhanced Rebate simply because the assignment itself occurs during the qualifying period if the original builder Agreement of Purchase and Sale was signed before April 1, 2026.
Can an Old Agreement Simply Be Amended?
The legislation contains anti-avoidance rules dealing with agreements entered into before April 1, 2026.
If an Agreement of Purchase and Sale was entered into before April 1, 2026 and is subsequently varied, altered or assigned, it is generally treated as having been entered into before April 1, 2026 for purposes of the Enhanced Rebate. There are also rules intended to prevent purchasers from simply terminating an earlier agreement and entering into a new agreement primarily to obtain access to the Enhanced Rebate. Accordingly, the original date and history of the Agreement of Purchase and Sale can be critical when determining eligibility.
Can the Builder Credit the Rebate on Closing?
Similar to the existing New Housing Rebate, Legacy Rebate, process a builder may agree to pay or credit the Enhanced Rebate to the purchaser, allowing the purchaser to receive the benefit as part of the closing adjustments rather than applying for the rebate after closing. The builder may also credit an eligible ONHAP amount to the purchaser.
Whether the rebate will actually be credited on closing will depend on the Agreement of Purchase and Sale, the builder’s procedures and the purchaser’s eligibility. Purchasers should therefore review their builder agreement carefully rather than assuming that the rebate will automatically appear as a credit on the Statement of Adjustments.
Who Is Responsible if the Purchaser Is Not Eligible?
Purchasers should carefully consider the eligibility requirements before relying on an HST rebate credited by the builder. While the CRA provides that a builder and purchaser may be jointly and severally liable where a rebate is credited and the builder knew or ought to have known that the purchaser was not entitled to it, builder Agreements of Purchase and Sale typically contain provisions protecting the builder in these circumstances. These provisions generally require the purchaser to indemnify the builder for any rebate credited on closing if the purchaser is subsequently found to be ineligible. In practical terms, the purchaser may be required to repay the rebate amount to the builder and then deal directly with the CRA to determine whether they qualify to claim the rebate independently. Purchasers should therefore ensure that the intended occupancy and other representations made in connection with the rebate are accurate.
How Do Purchasers Apply?
In most new construction transactions, the builder will credit the applicable HST rebate to the purchaser on the Statement of Adjustments at closing. As part of this process, the purchaser assigns their right to the rebate to the builder, and the builder applies for and receives the rebate directly. However, a builder is not required to credit the rebate on closing. Where the rebate is not credited on the Statement of Adjustments, an eligible purchaser may be required to pay the applicable HST on closing and then apply directly to the CRA to recover the rebate.
For the Ontario New Home Affordability Payment (ONHAP), a separate application is generally not required. Instead, the purchaser can provide consent on the GST/HST rebate application authorizing the CRA to share the necessary information with the Province of Ontario. If eligible, the ONHAP is then paid separately by the Province of Ontario.
Purchasers should therefore review their Agreement of Purchase and Sale and Statement of Adjustments carefully to determine whether the builder is crediting the rebate on closing or whether the purchaser will be responsible for applying for it directly after closing.
The Ontario Enhanced New Housing Rebate represents a substantial increase in the HST relief potentially available to purchasers of qualifying new homes. Depending on the purchase price and circumstances, an eligible purchaser may receive up to up to $80,000 toward the 8% Ontario portion of the HST, together with potential relief of up to $50,000 through the Ontario New Home Affordability Payment in respect of the federal portion.
However, eligibility depends on much more than the purchase price. The date of the Agreement of Purchase and Sale, construction timelines, purchase price, intended occupancy, prior agreements or assignments, and the availability of other HST rebates can all affect the final entitlement.
Purchasers of new construction homes should therefore have the HST and rebate provisions of their Agreement of Purchase and Sale reviewed carefully and should confirm their eligibility before relying on a rebate as part of the funds required to complete their purchase.
Because eligibility can turn on the wording and history of your Agreement of Purchase and Sale, the intended use of the property, and the way the rebate is handled at closing, it is important to review these issues before relying on an expected HST credit. MBLAW Professional Corporation can assist with the purchase of a new construction home or condominium, review the relevant HST and rebate provisions of your agreement, and help you understand how they may affect your closing costs. Contact our real estate team before closing to discuss your transaction and the rebate considerations that may apply.
