Canada will share costs for province’s housing initiative, subject to new federal legislation
As part of its upcoming 2026 budget, the Ontario government has announced the removal of the entire 13 percent of the harmonized sales tax (HST) for eligible buyers of qualifying new homes valued up to $1 million for a $130,000 maximum rebate.
In a news release, Ontario said its proposal seeks to strengthen its existing provincial HST new housing rebate and new residential rental property rebate for a year, specifically from Apr. 1, 2026, to Mar. 31, 2027. As before, the purchaser should acquire the new home as a primary residence or as a residential rental property.
For Ontario’s housing initiatives, the Canadian government agreed to share costs with the province, subject to the passage of federal legislation, which would approximately cover the federal five percent portion of the HST removed from new Ontario homes.
The provincial government explained that:
- For new homes valued up to $1.5 million, the maximum rebate of $130,000 would apply
- For new homes valued at or above $1.5 million, the maximum rebate would decrease proportionally from $130,000
- For new homes valued at $1.85 million and above, the maximum rebate would be $24,000
“Ontario thrives only when its people thrive,” said Rob Flack, Ontario’s minister of municipal affairs and housing, in the news release. “That is why our government is taking this massive step forward to protect Ontario by creating conditions to get more shovels in the ground, build more homes faster and help make the dream of homeownership a reality for more people.”
Goals of initiative
“Ontarians have seen costs increase as a result of ongoing economic uncertainty, so it is more important than ever that we continue to keep costs down to make life more affordable for families and individuals,” said Peter Bethlenfalvy, Ontario finance minister, in the news release.
Through its partnership with the federal government, the Ontario government expects to:
- Provide nearly $2.2 billion in total joint tax relief for provincial housing
- Spur 8,000 more housing starts in the province next year
- Support up to 21,000 jobs
- Increase Ontario’s gross domestic product (GDP) growth by $2.7 billion
“Today’s announcement will provide meaningful and significant relief to the people of Ontario, helping thousands more families realize the dream of homeownership and boosting Ontario’s economy by $2.7 billion,” said Ontario Premier Doug Ford.
The provincial government noted that the initiative aims to help it bring down the costs of and drive up the construction of new homes, as well as support families in having residences of their own.
“As a city, we welcome this important step to make homes more affordable,” said Carolyn Parrish, Mississauga mayor. “The provincial government’s HST cut will help turn Mississaugans’ homeownership dreams into reality.”
“Mississauga is growing and projects like this show the real progress happening on the ground,” added Nina Tangri, Ontario’s associate minister of small business, in the news release.
Other measures
Last October, the Ontario government announced a proposal to remove the full eight percent provincial portion of the HST for first-time home buyers of new homes valued at up to $1 million.
The provincial government then shared its plan to expand this HST relief by aligning its effective date with the federal government’s newly proposed earlier effective date of Mar. 20, 2025.
Thus, first-time home buyers can avail of both the provincial and federal governments’ rebates if they entered into an agreement of purchase and sale with the builder on or after March 20, 2025 and on or before Dec. 31, 2030.
In its news release, the Ontario government also discussed its measures to:
- Remove the whole eight percent provincial portion of the HST on qualifying purpose-built rental housing
- Provide housing-enabling infrastructure funding via the $4 billion Municipal Housing Infrastructure Program and the $1.2 billion Building Faster Fund
Ontario said these measures aim to help increase affordable home supply, support housing development, and strengthen the housing industry across the province.
