Ottawa's GST rebate on new homes would save typical first-time buyer $27K: PBO
The parliamentary budget officer says an eligible first-time homebuyer would save an average of $26,832 in sales tax on the price of a newly built home under Ottawa's latest housing proposal.
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In a new analysis released Wednesday, the federal government's fiscal watchdog predicts that 71,711 new builds would qualify for GST relief over the lifetime of the program.
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The proposal would see the federal portion of the sales tax eliminated on a new home worth up to $1 million if it's bought by a qualifying first-time homebuyer.
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The PBO forecasts the program will cost $1.9 billion over six years, while the federal government has pegged the 'tax savings' for Canadians at $3.9 billion over five years.
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The PBO's latest cost estimate is about $100 million lower than the figure it cited during the spring federal election, when the GST break was proposed. It attributes that gap to a later implementation date and a different definition used for first-time homebuyers.
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A Desjardins Economics analysis of the proposal released Monday offered one explanation for the discrepancy between the PBO's cost estimate and the government's figure: Ottawa might think its program will be more popular than the PBO does.
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A higher cost estimate suggests more first-time homebuyers purchasing qualifying new builds, in other words.
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The GST rebate, which is not yet law, was included in the Liberals' spring election platform as a way to help Canadians break into the housing market.
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A home priced at $1 million would receive the maximum rebate of $50,000. Homes priced below that amount would still get the full rebate – but since the sales tax is a smaller share of the final cost, the rebate would be lower as well.
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The rebate also would be lower than $50,000 for homes sold above $1 million because the rebate gradually ramps down until it zeroes out at a purchase price of $1.5 million.
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