Research Supports Ontario Housing Tax Holiday

- The proposed tax relief is part of a dual-government effort; the Ontario government has proposed rebating its full 8% provincial portion of the HST on new homes for first-time buyers up to $1 million. This is intended to align with a federal proposal to remove its 5% portion (the GST). - If both the provincial and federal proposals are enacted, a first-time homebuyer could save up to $130,000 on a $1 million home, with partial rebates available for homes valued between $1 million and $1.5 million. - The proposal comes as Ontario's housing starts are projected to fall to near two-decade lows in 2026, driven by a sharp decline in condominium pre-construction sales. Annualized housing starts are currently tracking at under 54,000, which is just 30% of the province's target of 175,000 new units per year. - Construction of family-oriented housing has been hit particularly hard, with starts for single-detached, semi-detached, and row houses hitting a record-low in January 2026. - Proponents like the Residential Construction Council of Ontario (RESCON) argue that taxes, fees, and levies account for nearly 36% of the cost of a new home in the province, a figure that has increased from 31% in 2021. - The federal legislation related to the GST rebate, Bill C-4, was passed by the House of Commons in December 2025 but still requires Senate approval as of February 2026. Ontario's parallel rebate is contingent on this federal bill passing. - Some industry groups, including RESCON, are advocating for the HST rebate to be expanded to all new home purchasers, not just first-time buyers, to have a broader impact on stimulating housing construction. - The Canada Mortgage and Housing Corporation (CMHC) forecasts that new home construction will continue to decline through 2028 due to high costs, weaker demand, and a rising inventory of unsold units.