Ottawa is at the centre of a major housing affordability push, with the federal government confirming it is in active talks with all provinces to cut the GST on newly built homes.
Federal officials have confirmed that negotiations are underway coast to coast, as the federal government looks to deliver on one of its most headline-grabbing housing pledges: removing the goods and services tax from new residential construction to help bring down the cost of buying a home.
What's on the Table
The federal government has been floating the idea of eliminating — or sharply reducing — the GST applied to new home sales. Currently, new homes in Canada are subject to a 5% GST, though buyers can claim a partial rebate if the purchase price falls below a certain threshold. That threshold has not kept pace with soaring home prices in most major Canadian markets, meaning the full rebate is now out of reach for the majority of buyers.
Removing or cutting the tax on new builds could meaningfully reduce the final cost of a home. On a $600,000 new build, for example, the GST alone adds $30,000 to the price tag — a significant chunk for first-time buyers already stretched thin.
Federal-Provincial Coordination Required
The complication is that several provinces have harmonized their provincial sales tax with the federal GST into a single HST. Any federal move to cut the GST component could have cascading effects on provincial revenues, which is why bilateral negotiations with each province are necessary before any policy change can be rolled out cleanly.
The minister indicated that talks are progressing and that the federal government is committed to reaching agreements with all provinces — not just those in the HST framework.
What It Could Mean for Ottawa Homebuyers
For Ottawa residents eyeing the new-build market — whether in Kanata, Barrhaven, Riverside South, or one of the many infill developments closer to the core — a GST cut could be a meaningful boost to purchasing power. The Ottawa market has cooled somewhat from its pandemic-era peaks, but new construction prices remain elevated, and affordability continues to be a top concern for younger buyers and families.
Local builders and developers have long lobbied for relief on the tax side, arguing that GST adds a layer of cost that makes it harder to bring new supply to market at price points accessible to middle-income Ottawans.
The Bigger Housing Picture
The GST talks are part of a broader federal effort to accelerate housing supply across Canada. The government has already made moves to remove GST from purpose-built rental construction — a policy that has been welcomed by developers — and is now looking to extend similar relief to the ownership market.
Housing starts in Ottawa have been relatively steady compared to other major Canadian cities, but affordability remains a persistent challenge. Any reduction in purchase costs, whether through tax relief or other mechanisms, is likely to be welcomed by buyers and industry watchers alike.
More details are expected as provincial negotiations advance. Keep an eye on ottown.ca for updates on how any final policy change could affect the Ottawa housing market.
Source: Global News
