Ontario Removes HST on New Homes for One Year: Up to $130,000 in Savings Starting April 2026

The Ontario government has announced a major housing affordability measure that will temporarily eliminate the 13 per cent Harmonized Sales Tax (HST) on eligible new homes for one year, starting April 1, 2026. For buyers of homes valued up to CA$1 million, the maximum savings could reach CA$130,000—a significant boost for first-time buyers and anyone looking to enter the GTA housing market.

The Policy: What It Covers

Premier Doug Ford announced the measure at a news conference in Mississauga as part of the upcoming 2026 Budget. The policy removes the full 13 per cent HST for eligible buyers of new homes valued up to $1 million, with a maximum rebate of $130,000. This applies to newly constructed homes, including detached houses, semi-detached homes, townhouses, and condominium units that meet the eligibility criteria.

The policy is time-limited to one year, meaning it will apply to purchases completed between April 1, 2026, and March 31, 2027. After that date, the standard HST rules will resume unless the government extends or modifies the policy.

The federal government is also partnering on this initiative, with the New Housing Rebate (federal portion of HST) already providing partial relief. Ontario’s move removes the provincial portion entirely, effectively making new homes HST-free for qualifying buyers during the one-year window.

Who Qualifies?

To be eligible for the HST exemption, buyers must meet several conditions:

• The home must be a newly constructed or substantially renovated residential property
• The purchase price must not exceed CA$1 million
• The buyer must intend to occupy the home as their primary residence (not for investment or rental purposes)
• The property must be located in Ontario

First-time home buyers will likely benefit the most from this policy, as they are often the most price-sensitive group in the market. A $130,000 HST saving on a $1 million home is equivalent to reducing the effective purchase price by approximately 13 per cent—a substantial reduction that could make the difference between affordability and unaffordability for many families.

Impact on the GTA Market

The GTA is expected to see the most significant impact from this policy. New construction in the Greater Toronto Area has been a dominant driver of housing supply for decades, and the HST exemption is likely to stimulate demand for new condo units and townhouses in the GTA’s suburban growth areas.

Developers in the GTA have already been facing headwinds from CMHC’s forecast of reduced condo construction and weak buyer demand. The HST exemption could provide a timely boost, particularly for projects in outer GTA municipalities like Brampton, Mississauga, Markham, and Richmond Hill where new townhouse and detached home inventory is most abundant.

The policy may also shift some buyer preference from existing resale homes to new construction. In June 2026, the average GTA home price fell 5.4 per cent year-over-year to $1.11 million, while active listings rose 30.8 per cent. For buyers who were considering new construction but deterred by the additional 13 per cent HST cost, this exemption removes a significant barrier.

Comparison With Other Programs

The HST exemption should be viewed alongside other government housing initiatives. The federal First-Time Home Buyer Incentive, the Land Transfer Tax Rebate (which provides up to CA$4,000 for first-time buyers in Ontario), and the federal New Housing Rebate all provide additional savings on top of this one-year HST exemption.

For a $1 million new home in the GTA, a qualifying first-time buyer could potentially save: CA$130,000 (HST exemption) + up to CA$4,000 (Ontario land transfer tax rebate) + federal new housing rebate = total savings that could exceed CA$140,000.

The One-Year Window: Strategic Timing

Because the policy expires on March 31, 2027, buyers who are considering a new home purchase should factor the deadline into their decision-making. Those currently in the pre-approval or house-hunting phase may want to accelerate their timeline to take advantage of the savings.

However, buyers should also be cautious about making rushed decisions. The HST exemption is a financial incentive, but it should not override sound home-buying judgment regarding location, property condition, and long-term value. The best strategy is to identify properties you genuinely want within the eligible price range and aim to close before the March 2027 deadline.

Broader Implications

This policy reflects the Ontario government’s recognition that housing affordability remains one of the province’s most pressing challenges. By temporarily removing a significant cost barrier, the government is attempting to stimulate new construction activity while simultaneously helping buyers afford their first home.

The one-year duration suggests the government views this as a targeted intervention rather than a permanent policy change. Whether it achieves its intended goals—boosting new construction, helping buyers enter the market, and stimulating GTA economic activity—will depend on how many buyers take advantage of the window and whether broader market conditions (interest rates, employment, trade policy) support sustained demand beyond the exemption period.