The Ford government will waive its portion of the sales tax on new homes for first-time buyers up to the value of $1 million as it bids to stimulate slumping home sales and housing starts in Ontario.
On Tuesday morning, Housing Minister Rob Flack and Finance Minister Peter Bethlenfalvy announced the move, confirming a policy which had, at times, appeared in flux.
The pair said they would use the Fall Economic Statement to rebate the eight per cent provincial portion of the harmonized sales tax for first-time home buyers on new homes up to $1 million. They estimated the change could save new homebuyers $80,000 when “combined with” other provincial measures.
“Our government is working every day to bring the dream of homeownership within reach for more people. Today’s announcement is good news not only for first-time homebuyers, but for workers and tradespeople who can keep doing what they love — building their communities,” Flack said in a statement.
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“The actions we’re taking today complement our legislation and is just one more way we are protecting Ontario by creating the conditions to build.”
The Ontario government had previously signalled that if the federal government removed its portion of the harmonized sales tax for first-time homebuyers, the province would follow suit.
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The federal government proposed earlier this year to rebate the federal portion of the HST on new and substantially renovated homes valued up to $1 million for first-time homebuyers.
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While homes valued up to $1 million would qualify for the full rebate, there will be partial rebates on a phased-in basis for homes valued up to $1.5 million.
The move confirms Ontario will only remove the sales tax from new homes for first-time buyers, rather than embracing a broader tax holiday advocated for builders. The latter is something Premier Doug Ford appeared to consider, until Bethlenfalvy told him it would cost too much.
“Let’s get rid of the HST,” Ford said at a news conference on Aug. 12, apparently offering the plan for all new homes.
“I will follow that — on anyone that buys a home, not just new homebuyers — on anyone. And let’s do it to a point of two years, so it puts pressure on the market…. That’s massive amounts of savings for people.”
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Asked about the decision again at a separate news conference on Aug. 14, the premier abandoned the pledge — suggesting he had been told it was a move his government couldn’t afford.
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“As for the HST, I got my knuckles rapped a little from the finance minister because he’s doing his job,” he said. “That’s a lot of money, but that’s something we’ll sit down with the finance minister and the prime minister and see how we can look at the HST for certain sectors.”
The back-and-forth over how much tax to waive comes as Ontario continues to post worsening housing data, and its goal of 1.5 million homes by 2031 slips away.
Two-thirds of the way through the year, in August, Ontario had achieved just 26 per cent of its goal for the year, and was the only province in Canada where housing starts are worse this year than last.
The Ford government won the 2022 election under a promise to build transit, highways and 1.5 million homes by 2031.
Despite introducing at least one housing law every year, the number of new homes in the province has stalled and starts are falling.
The province is yet to get near the 150,000 new homes it would need to hit every year for its target to be achieved.
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Over the summer, Flack admitted homebuilding in Ontario was at a “standstill” and pointed to concerns about the cost of building.
The Fall Economic Statement — which will include the measure — is set to be tabled on Nov. 6.
— With files from The Canadian Pres
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