The province is planning to temporarily remove Harmonized Sales Tax (HST) for buyers of new homes.

Premier Doug Ford announced the plan Wednesday at a news conference in Mississauga, saying the full 13 per cent tax will be removed for new homes valued up to $1 million from April 1, 2026 to March 31, 2027.

For homes valued up to $1.5 million the temporary measure would see them qualify for the maximum $130,000, decreasing proportionally to homes valued at $1.85 million, which would qualify for a $24,000 rebate, said the release.

The rebate will be included in the upcoming provincial budget.

“For too many families, the dream of home ownership is being pulled out of reach by high costs and economic uncertainty,” said Ford.

Taxes, development fees and other costs add hundreds of thousands of dollars to the cost of a new home, said Ford.

The release said eligible buyers could receive up to $130,000 from the rebate, which will be included in the upcoming provincial budget.

“[This] could stimulate an additional 8,000 housing starts in Ontario next year, supporting up to 21,000 jobs and boosting Ontario’s GDP growth by $2.7 billion,” said the province.

Ford repeated ahead of the budget his government “will never, ever raise a tax.”

“Government doesn’t have an income problem, it has a spending problem,” he said, adding the province is “laser focused” on keeping costs down across sectors, including housing, transit and gas.

• Would this HST rebate encourage you to buy a new home? Send an email to ask@cbc.ca.

This announcement comes after the provincial and federal government’s existing HST rebate for first-time buyers of new homes valued up to $1 million.

If he were a potential homebuyer, he would buy a new home and “do it right away,” said Ford.

“Please get everything together, you have one year … talk to your bankers and start buying the homes,” he said.

Ford said the announcement was like a large retail sign that said 13 per cent off and that “people are hungry” to get into the market.

He said the new measures will hopefully help “kick start the construction sector.”

Who is eligible for the HST break?

Eligible buyers must meet the following conditions, according to the province’s release:

• Purchase agreement is signed with a buyer between April 1, 2026 and March 31, 2027.
• Homes bought as a primary residence must have construction begin on or before December 31, 2028 and be completed on or before December 31, 2031. 
• Homes bought as a rental property must have construction completed on or before December 31, 2029.

Other eligibility criteria will be posted on the province’s website by the end of March. 

Ford said the full HST will be covered — including the federal five per cent portion — thanks to a partnership with the federal government.

The federal government has agreed to split costs with Ontario until legislation passes to cover the federal HST portion for new homes.

That’s a move Ontario says would provide nearly $2.2 billion in tax relief for provincial housing.

Ford did not provide additional details on the negotiation process with the federal government, which he said started “months ago.”

Developer Mattamy Homes announced last week that it would cover mortgage payments for up to a year on its new builds located within six neighbourhoods in the Calgary and Edmonton areas in Alberta.

When asked if developers should consider similar incentives in Ontario, Ford said that it’s “strictly” up to developers to decide how to bring in buyers in “an open market.”

The province is taking a “massive step forward” to get more shovels in the ground to build new homes faster, said Minister of Municipal Affairs and Housing Rob Flack in a news release.

“Homeownership is a cornerstone of Ontario’s economic success,” he said. “Ontario thrives only when its people thrive.”

A competitive housing market will help fuel the construction sector, while also “boosting affordability and growing [Ontario’s] economy,” Finance Minister Peter Bethlenfalvy said at the news conference.

“Here in Ontario, we do not believe in raising taxes,” he said.

He estimated the measure will spark an additional 8,000 housing starts, at a time when the most recent government projections show the province building 70,000 new homes this year, far off the pace needed to meet a goal of 1.5 million homes by 2031.

HST rebate is a ‘game changer’: BILD president

“It’s a great time to buy,” said Davide Wilkes, president of the Building Industry and Land Development Association (BILD). 

The announcement is a “game changer,” as homes have been “too far out of reach” due to government taxes, he said. 

Wilkes said he would be surprised if developers didn’t come up with “entrepreneurial” ideas, similar to Mattamy Homes in Alberta, to draw in potential buyers. 

The proposed measures will help builders get started on new projects across the province, said Scott Andison, CEO of the Ontario Home Builders’ Association.

He predicts there will be a turnaround in the decline in new home builds seen over the last few years. 

“This is the biggest announcement we’ve seen in home building in decades,” he said, adding he looks forward to future provincial announcements to tackle development charges.

The province and federal government are “making the dream of homeownership more attainable” by removing “one of the biggest upfront costs” for homebuyers, said Aurora Mayor Tom Mrakas.

He said municipalities have been doing their part to create more housing, but cannot solve the affordability challenges alone.