Federal Liberals and Conservatives vow to remove GST on new home purchases
What does this campaign promise mean for home buyers and borrowers?
As heating inflation and tariff fears squeeze wallets, the overall cost of living is a front-and-centre concern for Canadian consumers, especially as the federal election looms. A recent survey conducted by Narrative Research found that cost of living is the “dominant issue” for voters in the run-up to the vote on April 28, with concerns around US tariffs and resulting trade war coming in second.
While consumers are feeling the effects of higher prices everywhere from the grocery store to the gas pump, increased shelter costs have been particularly painful. Canadian average home prices, while down from their all-time peak of $816,720 in February 2022, are still considerably elevated compared to their pre-pandemic levels. According to the Canadian Real Estate Association, in February 2025, the average-priced home sold for $668,097 – a whopping $199,747 more than it did in the same month in 2019, marking a 42% increase.
Mortgage rates have also increased considerably in recent years; according to Statistics Canada, mortgage interest costs rose 20.1% year over year in 2024, following a 28.5% increase in 2023.
Federal parties promise to remove GST on new home builds for some buyers
It’s no surprise that home affordability is being made a central pillar among the contending federal parties, with both the Liberals and Conservatives offering a break on the 5% Goods and Services Tax (GST) on new home purchases.
GST is paid on the purchase of newly-built homes that are bought directly from the builder, or from an original buyer who is selling the property on assignment, and has not taken occupancy themselves. It is also paid for the purchase of “substantially-renovated” properties, where 90% or more of the interior has been removed or replaced. This is in addition to any applicable provincial sales tax, such as the Harmonized Sales Tax (HST) in Ontario. This is paid out as part of the property’s transactional closing costs, and is not included in the mortgage.
There is an existing GST / HST New Housing Rebate already available in Canada, which equals 36% of the GST buyers pay when purchasing a new home – up to $6,300 for homes with a fair market value of $350,000 or less.
Overall, removing GST entirely from a new construction purchase would shave $50,000 off of the purchase of a $1-million home.
Let’s break down the promises that each of the big three parties are campaigning on, and their implications for home buyers and borrowers.
The Liberal Party of Canada
After being sworn in following Justin Trudeau’s resignation, newly-minted Prime Minister Mark Carney wasted no time announcing the federal government would eliminate GST for first-time home buyers purchasing either a newly-constructed home, or “substantially renovated” property, priced at $1 million or under.
In his speech on March 20th, Carney stated, “This tax cut will save Canadians up to $50,000 – allowing more young people and families to enter the housing market and realize the dream of homeownership. By eliminating the GST, Canadians will face lower upfront housing costs and keep more money in their pocket. Eliminating the GST will also have a dynamic effect on increasing supply – spurring the construction of new homes across the country.”
In a statement responding to Carney’s announcement, the Toronto Regional Real Estate Board (TRREB) applauded the tax’s removal, saying the policy is a “positive step toward addressing housing affordability challenges and supporting Canadians in achieving homeownership.”
“The rising cost of housing has been a significant barrier for first-time buyers in the Greater Toronto Area and across the country. By eliminating the GST, the federal government is providing much-needed financial relief – reducing upfront costs and making homeownership more attainable for young families and new buyers entering the market,” states TRREB President Elechia Barry-Sproule.
The Conservative Party of Canada
Conservative Party leader Pierre Poilievre initially floated the idea of removing GST on new home purchase last fall, and doubled down on the promise on March 25, two days after sitting PM Carney called the federal snap election.
His version of the tax cut would include homes priced up to $1.3 million, and wouldn’t be limited to only first-time home buyers.
“Axing the GST will save homebuyers up to $65,000 on the purchase of an average home in our big cities, and save them roughly $3,000 every year in mortgage payments,” states the party’s release. It will also boost the number of new homes built each year, sparking the creation of 36,000 extra homes annually and generating income for construction workers and businesses. That will raise an extra $2.52 billion in income tax revenue from those trades workers and home builders.”
To fund the tax cut, the Conservatives would decommission the Liberal fed’s Housing Accelerator Fund and Housing Infrastructure Fund, which they claim will save $8 billion.
The announcement was cheered by the Residential Construction Council of Ontario (RESCON), who stated the increased threshold “more accurately reflects market realities.”
“Builders have been urging both the federal and provincial governments to remove the sales taxes to reduce the cost of new housing and spur construction of residential development,” stated RESCON president Richard Lyall in a release. “This plan is bold and forward-thinking and will save buyers tens of thousands of dollars on the purchase of a new home. This is certainly good news.”
Not sure where to start? Let us help you get started
The New Democratic Party of Canada
NDP leader Jagmeet Singh has not proposed the removal of GST on new builds, favouring instead broader permanent GST removal on “daily essentials”, with the aim of saving taxpayers $448 per year, or $1,450 per year when combined with other tax incentives.
The NDP would also roll back the capital gains tax cut proposed by both Carney and Poilievre, and raise the basic personal income tax amount to $19,500.
We’ll continue to update this post as more campaign details are released by Canada’s federal parties leading up to election day.
Also read:
Penelope Graham, Head of Content
Penelope has over a decade of experience covering real estate, mortgage, and personal finance topics and her commentary on the housing market is featured on both national and local media outlets.