The Saskatchewan Realtors Association is hopeful the recently announced GST rebate for first-time homebuyers purchasing new homes will help address housing supply issues.
Those who may be eligible for the rebate include first-time buyers who purchase a new home from a builder, build or hire someone to build a new home on land they own or lease, or buy shares in a co-operative housing corporation.
“If it can spur demand specifically with new construction, that means we’re really pushing the buyers to build new homes. And when you build new homes, what are you doing? You’re increasing inventory,” said Chris Guérette, CEO of the Saskatchewan Realtors Association.
Homebuyers can receive a full rebate on GST for new homes priced up to $1 million, and a partial rebate for homes priced between $1 million and $1.5 million. The program is expected to save first-time homeowners up to $30,000 on a new home and deliver $3.9 billion in tax savings for Canadians over the next five years.
The goal of the program is to spur construction of new homes across Canada. In much of Saskatchewan, real estate sales have been strong, but inventory has suffered.
Guérette said buying a new home comes at a cost and isn’t always an option for every buyer.
“Some people absolutely don’t want new homes. They want the older neighbourhoods with trees and the established culture. So, as long as there is a continuum of housing that is diverse, that’s really what we want to see. Generally, new builds are more expensive than the current housing stock,” she said.
She compared the situation to buying a car—where new models come at a premium, but many buyers choose used vehicles because they are more affordable.
That said, Guérette hopes the rebate will encourage some additional buyers to consider new construction.
“There is a certain portion of the population that will not look at new, but if we can have policies that help bring more people than currently looking at new builds, then all of a sudden we have more inventory—and this is really what we’re looking for,” she said.
The GST rebate is generally available when the agreement of purchase and sale for the home is entered into on or after May 27 and before 2031. Construction of the home must begin before 2031 and be substantially completed before 2036.
Some limitations for the rebate include:
- You can only claim the rebate once in your lifetime.
- You cannot claim the rebate if your spouse or common-law partner has previously claimed it.
- If, pursuant to an assignment sale, a first-time homebuyer assumes the rights and obligations of another purchaser under an original agreement entered into before May 27 the rebate is not available.
- If an agreement of purchase and sale entered into before May 27 is cancelled, and a new or altered agreement is entered into, the buyer may not be eligible for the rebate under the new or modified agreement.