First-Time Home Buyer GST Rebate in BC: Who Qualifies, How It Works & What You Pay at Closing

Buying a newly built home, condo, townhouse or pre-sale in British Columbia comes with an additional cost that buyers of most resale properties do not face: 5% Goods and Services Tax (GST).

For eligible first-time home buyers, however, the federal First-Time Home Buyers’ GST/HST Rebate can provide substantial relief, potentially rebating up to $50,000 of the federal GST paid on a qualifying new home.

There is one point buyers need to understand from the beginning:

The First-Time Home Buyers’ GST/HST Rebate is a rebate. It is not a GST exemption.

GST still applies to the purchase. Depending on how the builder handles the rebate, an eligible purchaser may receive the rebate as a credit toward the amount owing at closing, or may have to pay the applicable GST and apply to the Canada Revenue Agency (CRA) for the rebate afterward.

This distinction is particularly important when calculating how much cash you will actually need to complete the purchase of a new home.If you are considering new construction in Greater Victoria, you may also want to read my New Homes & Pre-Sales Victoria BC Buyer Guide and my guide to Buyer Closing Costs in Victoria BC.

What Is the First-Time Home Buyers’ GST/HST Rebate?

The federal government introduced the First-Time Home Buyers’ GST/HST Rebate to reduce the GST cost associated with purchasing or building a first home.The rebate is now available and applications are open through the Canada Revenue Agency.

For eligible first-time buyers, the rebate provides:100% of the federal GST on qualifying new homes valued at $1 million or less, up to a maximum rebate of $50,000.

For qualifying homes valued between $1 million and $1.5 million, the rebate is gradually reduced.Once the value reaches $1.5 million or more, the First-Time Home Buyers’ GST/HST Rebate is no longer available.For the current federal rules and application requirements, visit the Canada Revenue Agency First-Time Home Buyers’ GST/HST Rebate.

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The GST Rebate Is NOT a GST Exemption

This is one of the most important distinctions for first-time home buyers to understand.You may hear someone say:“First-time buyers don't pay GST on new homes anymore.”That isn't an accurate way to describe the program.The federal program is a GST/HST rebate, not an exemption from GST.

The purchase of a taxable new home remains subject to GST. The rebate allows an eligible purchaser to recover some or all of the applicable federal GST, subject to the program's requirements.

That difference matters at closing.

Do You Have to Pay the GST at Closing?

Potentially, yes.

How the rebate is handled can depend on the builder and transaction.In some purchases, the builder may agree to credit the eligible rebate against the amount the purchaser owes at closing. Appropriate rebate documentation is completed and the builder handles the claim.In that situation, the buyer receives the financial benefit of the rebate as part of the closing calculations.

However, a builder is not required to pay or credit the rebate to the purchaser.

If the builder does not credit the rebate, the buyer may have to fund the GST as part of the closing and subsequently apply to CRA for the rebate.That could represent tens of thousands of dollars.

For example, consider a qualifying new Victoria condo priced at $900,000 plus GST.

The GST is:$900,000 × 5% = $45,000An eligible first-time buyer could potentially qualify for a $45,000 First-Time Home Buyers’ GST/HST Rebate.

But that does not necessarily mean the buyer can arrive at closing without accounting for the $45,000.

If the developer does not credit the rebate at closing, the purchaser may have to provide the necessary closing funds and then submit the rebate application to CRA.

CRA provides detailed instructions under How to Apply for the First-Time Home Buyers’ GST/HST Rebate.

This is one reason I encourage buyers considering a new development or pre-sale to determine before making assumptions about their budget whether the developer's quoted purchase price includes GST, excludes GST, and how any applicable rebate will be handled.

For a broader breakdown of expenses, see my Victoria BC Buyer Closing Costs Guide.

How Long Does It Take to Receive the GST Rebate?

If the rebate is not credited by the builder and the purchaser applies directly to CRA, buyers should not assume they will receive the money immediately after closing.

CRA currently advises applicants to anticipate approximately 120 days for processing, although individual circumstances and requests for additional information can affect processing times.

Buyers who need to fund the GST at closing should therefore make sure they have sufficient funds available without relying on an immediate rebate payment.

Who Qualifies as a First-Time Home Buyer?

The federal definition deserves careful attention because being a “first-time home buyer” does not necessarily mean that you have never owned any real estate in your lifetime.

Generally, an applicant must meet requirements that include being:

• at least 18 years old;
• a Canadian citizen or permanent resident;
• purchasing or building a qualifying new or substantially renovated home;
• acquiring the property for use as their primary place of residence; and
• considered a first-time home buyer under the federal program's ownership and occupancy rules.

The applicable agreement and construction timelines must also qualify.

You can review the complete current requirements directly through CRA at Who Can Apply for the First-Time Home Buyers’ GST/HST Rebate.

What If You Previously Owned a Home?

Previous home ownership does not necessarily prevent someone from ever becoming a first-time buyer again.

The federal test looks at the calendar year in which you acquire the new home and the four preceding calendar years.In general, during that period you cannot have lived in a home as your primary residence that you owned or jointly owned.

This creates situations where someone who owned a home many years ago, sold it and subsequently rented for a sufficient period may eventually qualify as a first-time home buyer again.

The dates matter considerably, so buyers with previous ownership should confirm their eligibility rather than assuming they do or do not qualify.

What If You Owned Property Outside Canada?

This is especially important in Victoria's increasingly international real estate market.The federal first-time-buyer test is not restricted to property located in Canada.

CRA's rules consider a qualifying home inside or outside Canada.

Therefore, someone who has never owned property in British Columbia, or anywhere else in Canada,  is not automatically a first-time home buyer for purposes of the GST rebate.

For example, imagine a buyer who previously owned and occupied their principal home in:

• the United States;
• Mexico;
• the United Kingdom;
• Europe;
• China;
• India; or
• another country.

If that property was their primary residence and falls within the relevant period, it may affect their eligibility for the federal First-Time Home Buyers’ GST/HST Rebate.

Simply saying “I've never owned a home in Canada” is therefore not enough to establish eligibility.

Does Owning an Investment Property Overseas Disqualify You?

Not necessarily.

This is where the federal wording becomes important.The test does not simply ask whether someone has ever had their name registered on real estate somewhere in the world.

CRA looks at whether the individual lived in a home as their primary place of residence that they or their spouse/common-law partner owned or jointly owned during the relevant period.

Consequently, someone who owns an investment property overseas but has never occupied that property as their primary residence may have a different eligibility outcome from someone who owned and lived in their family home overseas.

Foreign investment properties, inherited properties, partial interests, trusts and unusual ownership arrangements should be reviewed with CRA or a qualified tax professional before relying on the rebate.

What If Your Spouse or Common-Law Partner Has Owned a Home?

This is another area where buyers can misunderstand the rules.

A person cannot necessarily say:“The property wasn't in my name, so I'm a first-time buyer.”

The federal test also considers certain home ownership by a spouse or common-law partner.

Suppose a person has never personally owned real estate but moves into a condo owned by their spouse. They live there together as their primary residence.

They later sell the condo and purchase a newly constructed home.

The fact that only one spouse owned the previous property does not automatically make the other spouse a first-time buyer.

CRA's test considers whether the individual lived in a home as their primary residence that they or their spouse/common-law partner owned or jointly owned during the applicable period.

The timing and circumstances are therefore critical.On the other hand, simply marrying someone who owned a property years ago does not automatically disqualify a person forever. The relevant ownership, occupancy, relationship and calendar-year requirements need to be examined.

Can Both Spouses Claim a $50,000 Rebate?

No. The $50,000 maximum should not be interpreted as $50,000 for each purchaser on the same $1-million property.

The rebate relates to the qualifying home and GST payable on the transaction.There are also restrictions involving previous use of the First-Time Home Buyers’ GST/HST Rebate by the purchaser or their spouse/common-law partner.

Couples purchasing together should have their eligibility reviewed as part of the transaction rather than assuming each buyer receives an independent $50,000 benefit.

Does the Home Have to Be Your Principal Residence?

Generally, yes.The FTHB GST/HST rebate is intended to help eligible Canadians acquire their first home to live in, rather than provide a tax incentive for purchasing a new investment property.

This distinction can be particularly important with Victoria pre-sale condominiums.

A purchaser buying a new condo purely to rent to tenants should not assume that being a first-time property owner makes them eligible for this rebate.

Different GST rules and rebates may apply to rental properties.

GST Rebate vs. BC Property Transfer Tax Exemption

Buyers should also be careful not to confuse GST with British Columbia Property Transfer Tax (PTT).

They are completely separate taxes with separate programs.

The First-Time Home Buyers’ GST/HST Rebate is a federal program administered by CRA.Property Transfer Tax is a British Columbia provincial tax.

BC also has a separate Newly Built Home Exemption from Property Transfer Tax. For qualifying properties, the current full exemption threshold is $1.1 million, with a partial exemption available above that amount up to $1.15 million.You can read the provincial requirements at the BC Government Newly Built Home Exemption.

Depending on the property and purchaser, someone buying new construction may therefore need to consider several different programs:

Federal FTHB GST/HST Rebate + BC Property Transfer Tax programs + FHSA + Home Buyers’ Plan + other applicable incentives.For more information about purchasing your first property locally, visit my First-Time Home Buyers Victoria BC Guide.

Buying a New Home or Pre-Sale in Victoria BC

The GST rebate is only one consideration when purchasing new construction.

A buyer should also understand:

• whether GST is included or added to the advertised price;
• deposits and deposit schedules;
• developer contracts;
• disclosure statements and amendments;
• completion and possession dates;
• assignment provisions;
• financing requirements;
• deficiency inspections;
• 2-5-10 new home warranty;
• strata fees and budgets;
• Property Transfer Tax;
• closing adjustments; and
• what happens if construction is delayed.

My New Homes & Pre-Sales Victoria BC Guide covers these issues in more detail.

Questions to Ask Before Buying New Construction in BC

Before relying on the First-Time Home Buyers’ GST/HST Rebate, ask:

Is GST included in the advertised purchase price or added on top?

Do I meet CRA's definition of a first-time home buyer?

Have I owned and occupied property anywhere in the world during the relevant period?

Has my spouse or common-law partner owned a home that I lived in as my primary residence?

Will the developer credit my GST rebate at closing?

If not, how much additional cash will I need to complete?

Am I eligible for the BC Newly Built Home Property Transfer Tax Exemption as well?

Does my mortgage approval account for the GST and closing costs?

These questions should be addressed well before completion day.

The Bottom Line

The new federal First-Time Home Buyers’ GST/HST Rebate can provide significant savings for eligible buyers purchasing new construction in Victoria and throughout British Columbia,  potentially up to $50,000.

But remember:It is a rebate, not an exemption from GST.GST continues to apply to the taxable purchase.

Depending on the transaction and builder, an eligible purchaser may receive the rebate as a credit toward their closing amount, or may have to fund the GST and apply to CRA afterward.

Eligibility can also become more complicated where a purchaser or their spouse has previously owned or occupied property, including property outside Canada.

For that reason, buyers should confirm their individual tax eligibility with CRA, their lawyer/notary and, where appropriate, an accountant or tax professional before relying on the rebate when determining their purchasing budget.

If you're considering a new home, condo, townhouse or pre-sale in Victoria, Esquimalt, Saanich, Langford, Colwood, Sidney or elsewhere in Greater Victoria, understanding the complete cost of the purchase before signing a contract is essential.

Continue reading:New Homes & Pre-Sales in Victoria BCFirst-Time Home Buyers Victoria BCBuyer Closing Costs Victoria BCUnderstanding Closing Costs as a BuyerVictoria BC Buyer FAQ

This article is intended for general real estate information and should not be considered tax, accounting or legal advice. GST/HST and rebate rules can change, and eligibility depends on individual circumstances. Buyers should confirm current requirements with the Canada Revenue Agency and appropriate professional advisors.