From Royal Assent to Reality: The Impact of the Making Life More Affordable for Canadians Act on Developers and Builders

After months of speculation and patient anticipation on the part of developers/builders and home buyers facing a difficult new home landscape, on March 12, 2026, the Making Life More Affordable for Canadians Act received Royal Assent and is now officially in effect, offering a significant housing tax incentive for first-time Canadian home buyers.

The new legislation amends the Excise Tax Act (Canada) to bring into effect a new Goods and Services Tax (“GST”) rebate for first-time home buyers of qualifying homes (the “FTHB GST/HST Rebate”). Qualifying first-time home buyers are eligible for a rebate of up to 100% of the 5% federal GST on qualifying new homes, to a maximum rebate amount of $50,000. 

The FTHB GST/HST Rebate eliminates the GST (or the federal portion of HST) for first-time home buyers on a qualifying new home valued up to $1 million. For homes between $1 million and $1.5 million, the amount of the Rebate is incrementally reduced. For example, a qualifying new home valued at $1.25 million is eligible for 50% of the maximum rebate, equal to a rebate amount of $25,000. Homes above $1.5 million are ineligible for the FTHB GST/HST Rebate.

Eligibility Criteria 

The following eligibility requirements must be met to qualify for the FTHB GST/HST Rebate: 

The buyer must be:

1. At least 18 years of age;
2. A Canadian citizen or permanent resident of Canada;
3. A first-time home buyer, meaning the buyer has not lived in a home that the buyer or the buyer’s spouse or common-law partner owned, or jointly owned, whether in or outside of Canada, as the buyer’s primary place of residence within the current calendar year or the previous four calendar years. 

The FTHB GST/HST Rebate is a one-time benefit, for which a buyer is ineligible if they or their spouse or common-law partner have previously received this FTHB GST/HST Rebate.

Qualifying Homes

The FTHB GST/HST Rebate is available for the following types of homes:

1. A newly built or substantially renovated (generally meaning 90% or more of the interior of the existing house must be removed or replaced) home purchased from a builder;
2. A newly built or substantially renovated home built by or for the buyer;
3. A share in a co-operative housing corporation to use a unit in a newly built or substantially renovated co-op.

Importantly, a “home” does not only include freehold housing. Houses, residential condominium units, duplexes, mobile homes (including modular homes) and floating homes are all eligible for the FTHB GST/HST Rebate.

It is important to note that the FTHB GST/HST Rebate is only available for first-time home buyers who are purchasing the home as their primary residence. In addition, the buyer must be the first individual to occupy the home after its construction or substantial renovation.

Timing and Retroactive Application

The FTHB GST/HST Rebate applies retroactively to agreements of purchase and sale entered into on or after March 20, 2025 – a welcome change from the original proposed effective date of May 27, 2025 – and prior to January 1, 2031. 

The construction or substantial renovation of the home must begin prior to January 1, 2031, and be substantially complete with ownership being transferred to the buyer before January 1, 2036.

The Rebate Mechanism

The Canada Revenue Agency (“CRA”) has already published its updated guide and forms to account for the FTHB GST/HST Rebate.

The options for applying for and receiving the FTHB GST/HST Rebate are the same as for the GST/HST New Housing Rebate: either (i) the buyer can apply directly to the CRA following closing, and the CRA will issue the rebate directly to the buyer, or (ii) the buyer can assign their rebate to the builder at closing, and the builder will credit the rebate against the purchase price on the statement of adjustments, with the burden being on the builder to submit the rebate application to the CRA and receive the rebate.

As with the GST/HST New Housing Rebate, a first-time home buyer will be required to satisfy the builder on closing that the buyer qualifies for the FTHB GST/HST Rebate. Prudent builders will ensure they provide themselves with flexibility to accept or reject a buyer’s claim to qualify for the FTHB GST/HST Rebate to protect themselves from potential liability to the CRA for same and to avoid the possibility of having to collect the amount credited to an ineligible buyer post-closing.

Strategic Implications for Developers

Developers and builders must keep the $1 million threshold in mind. The full FTHB GST/HST Rebate removes the 5% GST from homes priced under $1 million. Accordingly, projects with homes priced at or below $1 million potentially stand to benefit from renewed first-time home buyer demand, providing incentives to builders to maintain competitive pricing for active and upcoming projects.

As the number of unsold or defaulted-on inventory homes has been steadily increasing on new subdivision and condominium projects, the FTHB GST/HST Rebate should provide an opportunity for builders and developers to aggressively market these inventory homes to potential first-time home buyers.

In a downturned market where unsold inventory is a common and ongoing challenge, the FTHB GST/HST Rebate should provide some relief for builders.

Caution to Builders and Developers

As expected, the newly enacted legislation has closed some glaring potential loopholes.

First, the FTHB GST/HST Rebate will not be available to an assignee who assumes the rights and obligations of the original buyer if the original purchase agreement was entered into before March 20, 2025. Additionally, the FTHB GST/HST Rebate is not available for agreements of purchase and sale that have been terminated and then subsequently re-entered into for the purposes of qualifying for the FTHB GST/HST Rebate.

Developers and builders, as well as their sales teams, must be wary of these restrictions.

Developers and builders should move quickly to capitalize on the opportunities the FTHB GST/HST Rebate provides, in concert with their trusted legal advisors. While limited in scope and application, the FTHB GST/HST Rebate is a welcome boon to the new home industry, which has seen historical lows over the last couple of years, and is hopefully the first sign of light at the end of the tunnel for developers and builders.

Whether you are a developer or a builder, it is important to understand the potential implications of the new Making Life More Affordable for Canadians Act on your projects and business operations. For more information or advice on these legislative amendments, please contact a member of Torkin Manes’ Subdivision/Condominium Development team.