New home GST rebate will cost $1.9B, PBO report says
Carney's election promise is part of the government's plan to temper Canada's ongoing cost-of-living and affordability crisis
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OTTAWA — Giving new homeowners a break will cost the government billions, a new report from Canada’s fiscal watchdog says.
The report released Wednesday by the office of Parliamentary Budget Officer Yves Giroux says the key election pledge from Prime Minister Mark Carney offering new homebuyers full GST rebates on new homes valued under $1 million, and partial rebates for homes up to $1.5 million, will cost $1.9 billion over six years.
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“Across its term, we project that the proposed rebate will provide rebates for about 71,711 purchases of new homes by first-time homebuyers purchasing homes valued under $1.5 million,” the report stated.
“This represents a subsidy averaging $26,832 for 4.8% of housing completions over this period.”
Carney’s election promise, adapted from proposed policies touted by the Conservatives during this year’s federal election campaign, is part of the government’s plan to temper Canada’s ongoing cost-of-living and affordability crisis.
Bill C-4, the legislation intended to enact this policy, passed first reading in the House of Commons last Thursday.
Based on current trends and available home sales data, the report estimates the legislation will provide rebates for a little under 72,000 new homes valued under $1.5 million, representing an average subsidy of $26,832.
Over the program’s six years, the report estimates about 1.5 million homes and apartments will be completed, of which 836,000 will end up in the ownership, condo and co-op markets.
Of those, the report estimates 407,948 will be purchased as primary residences, 81,146 of which will be eligible first-time homebuyers, and 77,253 will be under the $1.5-million value threshold.
A report issued last week by Desjardins Economics suggested the rebate could save new homebuyers up to $240 on their monthly mortgage payments on an all-in, tax-included price of a $1-million home, with a slightly smaller down payment.
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