GST on a new home in Canada is 5% of the purchase price, charged on newly built homes and substantial renovations — and it is usually payable in cash at closing rather than rolled into the mortgage. That last point catches buyers off guard: most plan their down payment down to the dollar, then discover a five-figure tax bill due on possession day. Plan for it from the first budget, not the final week.

Photo: Crisco 1492, via Wikimedia Commons (CC BY-SA 4.0).

Which homes actually have GST charged on them?

GST applies to new housing: a newly constructed home, and in some cases a home that has been substantially renovated. Resale homes are generally exempt — no GST when you buy a used home from its owner.

In Alberta there is no provincial sales tax stacked on top, so the federal 5% GST is the full sales-tax picture on a new build here. That is one reason the Alberta new-home math looks different from provinces where a provincial tax is added as well.

Substantial renovation is a technical term with a threshold most casual updates never reach, but if you are buying a comprehensively rebuilt property, confirm its tax status in writing before you rely on it.

Can the GST be added to the mortgage?

Usually not. Lenders and insurers typically require GST on a new home to be paid from the buyer’s own funds at closing, separate from the mortgage advance. Confirm the treatment on your specific file early, because it changes how much cash you truly need.

That is the real planning point: your funds to close are the down payment, plus GST where it applies, plus your other closing costs. A pre-approval that only counts the down payment can leave you short on possession day even when the mortgage itself is approved.

It is also why new-build purchases are planned on two timelines at once. My guide to New-Build Mortgage Approvals covers the approval side, and a Pre-Approval & Refinance Check is where the full cash-to-close number gets worked out before you sign with a builder.

“We always refer our own clients, family and friends to Travis and his team without hesitation.” – Funk Law, Google review

Is there any relief from GST for first-time buyers?

A federal GST relief measure for first-time buyers of new homes was announced in 2025: up to the full GST on a new home priced up to $1 million, phasing out toward $1.5 million. Relief measures like this depend on legislation and program rules that are confirmed at the time you buy, so verify the current status before building it into a budget — never assume it has landed.

Separately, a long-standing GST New Housing Rebate has existed for qualifying new homes within specific price ranges, with its own forms and conditions. Whether either relief route applies to you is a question for your lawyer or tax advisor at the time of purchase.

What I can do as your broker is make sure the mortgage plan does not silently assume money you have not confirmed. If a rebate is coming, we plan for when it arrives — not before.

Is the builder’s price “plus GST” or “GST included”?

Ask this question before you sign, in those exact words. Builder prices are sometimes quoted net of GST, so the 5% lands on top of the number you budgeted around.

Get the answer in writing: the base price, the GST amount, any rebate the price assumes, and the total you will actually pay. Illustration only: on a $500,000 new home, 5% GST equals $25,000. That is arithmetic, not a quote — but it shows why the GST line deserves its own budget.

On rebates, the reference numbers: the long-standing GST New Housing Rebate lets buyers recover 36% of the GST, to a maximum of $6,300, with the full rebate applying at $350,000 or less. The newer federal GST relief for first-time buyers covers up to 100% of the GST on new homes up to $1 million for eligible buyers.

Buying new and want the full cash-to-close picture before you sign? Call me at (780) 722-5621 — I will try to call you this week, and if you reply with a good time, we can map your down payment, GST and closing costs on one page.

By Travis Bannert, Realtor and Mortgage Broker
Travis Bannert, Mortgage Broker | Next Door Mortgages, Dominion Lending Centres | (780) 722-5621 | nextdoormortgages.com