Ontario and Federal Governments Expand Sales Tax Break to All New Home Buyers
Event summary
- Federal and Ontario governments extended a 13% sales tax break on new homes worth $1M or less to all buyers, not just first-time buyers, effective March 25, 2026.
- RESCON president Richard Lyall called the move a critical step to revive the struggling residential construction sector.
- Taxes, fees, and levies account for 36% of the cost of a new home, per a CANCEA report for RESCON.
- Single-family home sales and housing starts have plummeted in the Greater Toronto Hamilton Area, leading to industry job losses.
The big picture
The extension of the sales tax break reflects growing government recognition of the housing crisis and its economic ripple effects. Residential construction is a key economic engine in Ontario, and the sector has been hit hard by rising costs, regulatory barriers, and high tax burdens. The move aligns with industry advocacy for broader affordability measures, though additional reforms will be needed to fully address the housing downturn.
What we're watching
- Policy Impact
- How the expanded tax break will affect new home sales and housing starts in Ontario.
- Economic Activity
- Whether increased economic activity from the tax break will offset foregone tax revenues for governments.
- Regulatory Reform
- The pace at which additional housing policy reforms, such as development charge reforms and faster approvals, will be implemented.
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