Ontario is planning to temporarily remove its share of the Harmonized Sales Tax (HST) on qualifying new homes as part of its upcoming 2026 Budget. This proposal would eliminate the full 13% HST for eligible purchases of new homes priced at up to $1M, with some relief also available for homes valued as high as $1.85M. Designed as a one-year program from April 1, 2026, to March 31, 2027, this initiative aims to reduce upfront costs for buyers while encouraging new housing development throughout the province.
This plan is being put forward in collaboration with the federal government, which has already announced that it will drop its portion of the HST. Together, both levels of government expect to deliver nearly $2.2B in combined tax relief related to housing.
According to the proposed framework, the complete 13% HST would be removed for new homes costing $1M or less, providing a maximum benefit of $130,000. That maximum amount would still apply to homes worth up to $1.5M before gradually decreasing on a sliding scale between $1.5M and $1.85M, where the rebate goes down to $24,000. Homes that are priced over $1.85M will still qualify for the existing provincial rebate at that level.
The policy is anticipated to speed up construction timelines; provincial estimates suggest there could be as many as 8,000 more housing starts within the next year. This surge in activity could support around 21,000 jobs and add approximately $2.7B to Ontario’s GDP.
Waterdown skyline, image by Urban Toronto Forum contributor Branden Simon
The increased rebate builds on previous actions like Ontario’s earlier decision to eliminate the provincial portion of HST for first-time homebuyers purchasing homes up to $1M. In this update, Ontario is also synchronizing its implementation dates with those of the federal program; it will apply to purchase agreements signed from March 20, 2025, until the end of 2030. The current eligibility criteria under both the New Housing Rebate and New Residential Rental Property Rebate will remain unchanged.
The Building Industry and Land Development Association (BILD) along with the Ontario Home Builders’ Association (OHBA) have emphasized months of coordinated discussions with provincial and federal officials backed by economic analysis that examined how tax relief can affect housing supply. With market activity slowing since 2022, these organizations have argued that cutting upfront costs is vital for boosting demand and keeping construction projects going; they see this expanded HST rebate as a move towards stabilizing the industry and supporting jobs.
The extended relief would be applicable only for agreements signed after April 1, 2026; earlier transactions will still follow existing tax regulations. Just like current rebate programs, benefits may be assigned directly to builders at closing so they can be reflected in purchase prices instead of being claimed later.
Alongside these temporary tax adjustments, Ontario has highlighted its removal of provincial HST on qualifying rental housing built specifically for that purpose along with significant infrastructure investments through programs such as the $4B Municipal Housing Infrastructure Program and the $1.2B Building Faster Fund.
At the same time, cities like Mississauga are taking steps such as reducing or eliminating development charges to facilitate new construction projects. “As a city, we welcome this important step to make homes more affordable. The provincial government’s HST cut will help turn Mississaugans’ homeownership dreams into reality,” said Mississauga Mayor Carolyn Parrish.
“Today’s announcement reflects what we can accomplish when all levels of government come together with a shared commitment to getting more homes built faster. Mississauga is growing and projects like this show real progress happening on the ground,” said Nina Tangri, Associate Minister of Small Business.
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Urban Toronto’s research and data service UTPro offers detailed information about construction projects in Greater Golden Horseshoe-from proposals through completion stages. Other services include Instant Reports that provide downloadable snapshots based on location and a daily newsletter called New Development Insider tracking projects from initial applications.
