Tax Rebate for a New Home: How Does It Work?

Buying or building a new home is a major investment. In Quebec, as in the rest of Canada, a new home is subject to the GST (5%) and the QST (9.975%), which account for a significant portion of the final price. However, in most turnkey projects, the real estate developer handles tax management and refunds according to the terms outlined in the contract. Fortunately, there are tax refund programs for new homes, commonly referred to as “tax rebates,” that allow you to recover a portion of these amounts. 

In some cases, particularly for first-time homebuyers, additional government measures may apply to facilitate homeownership. Here is a detailed guide to understanding how tax rebates work for new homes in 2026.

What taxes apply to a new home?

When buying a new home in Quebec, two main taxes are added to the sale price:

• Federal GST (5%)
• Provincial QST (9.975%)
   

For a $400,000 home, these taxes amount to approximately $60,000 in additional costs. This is therefore a significant expense, which is why taking advantage of the tax rebate on new homes is so beneficial.

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GST Refund Criteria for New Homes

The federal government offers a partial refund of the GST paid when purchasing a new home. In the case of a turnkey project, this refund is generally handled by the homebuilder, according to the terms of the sales contract.

To be eligible, the home must be your primary residence (occupied by you or a family member).

There are also limits to be observed; here are the caps:

• Maximum rebate if the price (before taxes) is $450,000 or less.
• No refund if the price exceeds $475,000.

The maximum amount cannot exceed 36% of the GST paid, or a maximum of $6,300.

For example, for a home priced at $400,000 before taxes:

• GST = $20,000
• Potential refund = 36% x $20,000 = $7,200 (but capped at $6,300).

Full GST Refund for First-Time Homebuyers

The federal government has now implemented a full GST refund for first-time buyers of new homes, for eligible properties valued at up to $1.5 million.

In practice, for a turnkey project, the developer continues to apply the portion of the GST rebate already included in the standard program directly to the contract. However, in the case of a first-time homebuyer, the buyer can now claim the difference from the federal government.

Thus, the GST can ultimately be fully refunded, representing a major financial benefit for first-time buyers.

To view the official program details and eligibility requirements, please refer to the Government of Canada’s information 

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QST Refund Criteria for a New Home

Quebec also offers a partial QST refund for new homes.

In the context of a turnkey project, the management of the QST and the applicable refund is generally handled by the real estate developer, according to the terms set out in the contract.

Just as with the GST, to be eligible, the property must be considered a primary residence. 

The refund is subject to price caps:

• Maximum refund if the price (before taxes) is $300,000 or less.
• No rebate if the price exceeds $450,000.
  
   

The maximum amount is 50% of the QST paid, or a maximum of approximately $9,975.

 

Example for a home priced at $350,000 before taxes:

• QST = $34,912
• Potential refund = 50% x $34,912 = $17,456, but the refund becomes degressive once the price exceeds $300,000, according to the scale established by Revenu Québec. The exact amount therefore depends on the final value of the property.
  
   

Turnkey Purchase vs. Self-Build

In a turnkey purchase, the builder usually includes the GST and QST in the listed sale price. In this type of project, the real estate developer generally handles tax management as well as the application of the rebate to which the buyer may be entitled, in accordance with the terms set forth in the contract. Depending on the agreement, the developer may also directly apply the portion of the rebate to which the buyer is entitled. In this case, the home is sold “tax-free,” and the buyer does not always have to file an official rebate claim, provided this condition is clearly stated in the contract.

This approach greatly simplifies the process for the buyer, who benefits from a clear, no-surprise price while receiving assistance in applying for available government programs.

Conversely, self-building requires a more comprehensive process. The person building their own home purchases the land themselves, hires contractors, and pays directly for materials and labor. It is therefore their responsibility to claim the GST and QST refund from the governments, attaching all supporting invoices. The claim must be submitted within a maximum of two years following the completion of the work.

 

When you buy a new home directly from Entreprises Lachance, the price listed on the properties always includes the GST and QST.

This means there are no surprises at the time of signing: the price you see on the home listing is the final price.

For eligible first-time buyers, it’s important to note that only a portion of the GST refund can be applied directly to the contract, and the balance can be claimed separately to obtain a full refund.

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Steps to Obtain a Tax Refund on a New Home

The steps described below apply primarily to self-build projects or situations where the refund is not already handled by the real estate developer. In the case of a turnkey purchase, the developer generally manages the applicable taxes and refunds, which limits or even eliminates the steps the buyer needs to take.

1. Keep all invoices: contractors, materials, permit fees.
2. Fill out the official GST/QST form
3. Submit the application to Revenu Québec.
4. Meet the deadlines: the claim must be filed within two years of the date of occupancy or the signing of the deed of sale.
    

If you need assistance, a notary or Revenu Québec staff can guide you to avoid mistakes. 

Some exceptions and special cases regarding tax refunds

• Second homes are not eligible for a refund.
• For long-term rentals, certain specific conditions apply.
• In the case of major renovations, a renovation that amounts to rebuilding more than 90% of the house may qualify as a new home.

Complete numerical example

Let’s consider the case of a turnkey new home sold for $420,000 before taxes. The 5% GST amounts to $21,000, while the 9.975% QST adds $41,895, for a total of $62,895 in taxes.

As for refunds, the federal portion allows you to recover 36% of the GST paid, which equals $7,560, but the refund is capped at $6,300. For the QST, since the property price exceeds $300,000, the provincial refund is degressive: it can be estimated to cover approximately 40% of the tax paid, or around $7,000.

Ultimately, the buyer could therefore recover approximately $13,300 by combining the two programs.

First-time buyers: full GST refund

To make homeownership more accessible, the federal government has implemented a full GST refund for first-time buyers of a new home.

In turnkey projects, part of the rebate is generally already applied directly to the contract by the developer. The difference can then be claimed by the eligible buyer, thereby allowing for a full GST refund.

This measure represents a significant financial incentive, capable of substantially reducing the total cost of purchasing a new home.

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Tips for Maximizing Your New Home Tax Rebate

Before signing the purchase agreement, make sure the property meets the eligibility criteria, especially if its price is close to the qualifying thresholds -approximately $300,000 for the QST and $450,000 for the GST. 

Next, ask your builder if part of the rebate is already included in the listed price to avoid any unpleasant surprises. 

Also, build in a buffer in your budget: even with a tax refund, these amounts remain a significant expense. Finally, don’t wait to take action: the deadline for submitting an application is two years after taking possession, and time flies.

A refund that really makes a difference

The tax rebate for a new home can result in savings of over $10,000, a sum that significantly reduces the total cost of a real estate project.

The GST allows for a maximum refund of $6,300, which is reduced on a sliding scale when the price exceeds $450,000, while the QST offers up to $9,975 for a property valued at less than $300,000, with a partial refund available up to $450,000. 

By keeping all your receipts, meeting the deadlines, and using the appropriate forms, you can recover a significant portion of your expenses and thus tangibly reduce the final price of your new home.