The Greater Ottawa Homebuilders’ Association said removing federal sales tax from new homes will improve housing affordability in the city and impact home prices in the region.
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The Greater Ottawa Homebuilders’ Association says removing federal sales tax from new homes will improve housing affordability in the city and affect home prices in the region.
Liberal Party Leader Mark Carney and Conservative Party Leader Pierre Poilievre have both promised to remove GST on new homes as part of their parties’ election platforms.
Carney promised to eliminate GST from new homes under $1 million, which would save Canadians an estimated $50,000 per purchase. According to Carney’s website, the move would allow young Canadians to enter the housing market.
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“By reducing upfront costs, we will empower young families and individuals to invest in their futures and build stronger communities. We expect this will also have a dynamic effect of increasing supply,” the website read.
Poilievre also promised to axe GST for new homes sold for up to $1.3 million if the Tories wins the federal election on April 28. The Conservative leader said the move would allow middle-class Canadians in expensive cities like Vancouver and Toronto to set down roots. Homebuyers would save around $65,000 under his party’s plan.
“Carney just doesn’t understand that Canadians can no longer afford to live in towns and cities they grew up in,” he said.
The promises were well received by the Greater Ottawa Homebuilders’ Association, which said the GST cuts would improve housing affordability in the capital region.
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According to data from The Canadian Real Estate Association, the median sale price for a single detached home was around $766,000 in the fourth quarter of 2024, up 4.2 per cent year-over-year.
The median sale price for townhouses and rowhouses was around $575,000 in that same period, up 5.5 per cent year-over-year.
The median sale price for apartment units saw the least change: up only by 0.6 per cent year-over-year to $387,500 in the same quarter.
Jason Burggraaf, the executive director of the Greater Ottawa Homebuilders’ Association, said he expected the federal government to change the threshold for the GST rebate for homebuilders if the policies were passed.
When the GST was first introduced, the government put in a rebate to offset supply and construction costs so there wouldn’t be a tax on new homes. However, prices of homes, construction, labour and land have gone up, all of which have contributed to soaring housing prices.
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“The home buyer usually signs the (GST rebate) over to the home builder to get that advertised price on their new home,” Burggraaf told Postmedia on Saturday.
“What we’re assuming would happen is that 100 per cent of the GST would be included in the rebate, which would then be assigned over to the home builder. The advertised price of a new home doesn’t (include) GST on top of that.”
Burggraaf also said the move would eliminate GST from development fees, fees that homebuyers need to pay to get services and infrastructure to their new homes. In Ottawa, single-family homeowners in the suburbs can expect an additional $65,000 in taxes alone. Homeowners in Ottawa’s city centre can expect to pay around $10,000 less in taxes.
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“It would really remove a significant tax-on-tax dynamic as well,” Burggraaf said.
Burggraaf said he wanted the provincial government to remove provincial sales tax from new home builds as well.
He added that removing the GST was a good first step to reducing barriers for young Canadians who could not afford to buy homes.
“People are not settling down as quickly as before,” Burggraaf said.
“The precariousness of the job market obviously has a big impact on how much you can afford and how much you can save for a down payment. But, ultimately, every segment of the population, whether they’re buying a new home or moving into a new rental or trying to buy a used entry-level home … Everyone is a bit more stuck because the fair amount of demand has so outpaced the housing that’s out there.”
With files from Rahim Mohamed, National Post
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