GST cut for new homes could cut first-time homebuyers’ mortgage payments by up to $240 per month: report

OTTAWA — First-time homebuyers in Canada could save up to $240 per month on their mortgage payments through the federal government’s plan to eliminate the sales tax (GST) on new homes, a new analysis shows.

The impact on home affordability would be “particularly strong,” a new report from Desjardins economists says.

The Liberal government has introduced legislation that would eliminate the GST on sales of new or renovated homes worth up to $1 million for first-time homebuyers, a relief that could shave up to $50,000 off the final price of the home.

For homes priced above $1 million, the exemption will gradually be reduced to $1.5 million.

However, Desjardins economists have warned that the policy could increase demand for housing in the short term, which could lead to higher prices if plans to increase supply are not implemented at the same time.

The bill has yet to pass parliament. The Liberal government introduced the plan at the same time as promising to cut income taxes from July 1.

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