When it comes to buying a new home in the Greater Toronto Area (GTA), prospective buyers may be surprised to learn that roughly 25% of their purchase price goes toward government fees, taxes, and charges. These costs, applied by municipal, provincial, and federal levels, are making home ownership significantly more challenging. Reducing these charges would be one of the quickest ways to lower costs and increase the supply of affordable homes, but a key piece of reform could start with an overhaul of the HST rebate program for new homes.
The Federal HST new home rebate, originally introduced in the early 1990s, was designed to alleviate financial pressure on new home buyers by lowering the tax burden on homes priced below a set threshold. However, this threshold hasn’t changed since 1991, even as home prices have nearly tripled. Today, few, if any, new homes in the GTA fall under the rebate thresholds, which are still set at $350,000 for full rebate eligibility and $450,000 for partial eligibility. As a result, the program no longer benefits buyers in high-priced markets like the GTA.
Due to this lack of adjustment, buyers in the GTA are missing out on rebates, adding roughly $42,000 in HST per single-family home. This discrepancy disproportionately affects younger buyers, including Millennials and Gen Z, who face higher prices and receive little government support in their home purchases, unlike previous generations who benefited from the rebate.
Adjusting these thresholds to align with current market realities could restore fairness, allowing the HST rebate to once again support affordability across Canada. Although a single adjustment won’t entirely resolve the housing crisis, it’s a step toward easing the burden for today’s buyers and opening up a broader conversation about fairer taxation on new home purchases.
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#PolicyChangeNeeded #GenerationalWealth #ChrisAbbott
