Why Ontario's 13% HST Rebate Is Quietly Working Against Ottawa Buyers

Ottawa homebuyers weighing a new-construction purchase are running into a tax break that looks generous on paper but is quietly getting absorbed before they ever see it.

The rebate in a nutshell

Under Enhanced New Housing Rebate (ENHR) rules, buyers can access tax relief on 13 per cent HST, worth up to $130,000 on eligible new builds. The rebate applies to homes purchased from a builder where the agreement of purchase and sale was entered into on or after April 1, 2026 and on or before March 31, 2027, and to owner-built homes where construction begins in that same window, according to the Canada Revenue Agency.

How 'Net of HST' pricing works against buyers

Standard builder practice in Ontario is to market properties using "Net of HST" pricing. The builder sets advertised prices assuming the buyer qualifies for the primary residence rebate and assigns that credit back to the developer at completion. In other words, the rebate a buyer thinks they're getting has often already been folded into the number on the sign, not handed over as extra savings at closing.

What it looks like in Ottawa

The effect is visible across the city's newer suburbs. In Ottawa communities including Riverside South, Barrhaven, Kanata and Orleans, base prices for entry-level models have risen by almost $20,000 since last October, with single-family models up by $40,000 in some cases, according to Ottawa Business Journal reporting. For buyers counting on the rebate to make a new build more affordable, those increases can eat up much or all of the intended relief before the deal even closes.

The costs no rebate covers

Even with the ENHR applied, Ottawa buyers closing on a new-construction property can typically expect $5,000 to $10,000 in additional costs, covering items such as Tarion enrollment fees, finishes, landscaping and appliances not covered by builder contracts. Those extras sit outside the rebate entirely, adding another layer of cost that a headline HST break doesn't address.

A market backdrop

The pricing dynamic is playing out against a housing market that isn't exactly starved for supply. Ottawa's current inventory stands at 4.1 months for detached homes, 4.2 months for townhomes and 6.3 months for condominiums, meaning builders aren't under heavy pressure to compete on price even as rebate-driven base prices climb.

The fine print buyers need to know

There's also a liability buyers should understand before signing. A buyer who is not actually eligible for the Ontario ENHR but received it is responsible for repaying that amount to the CRA. Eligibility hinges on using the property as a primary residence, so buyers planning to rent out a new-build condo or house, even temporarily, should confirm their status before assuming the rebate applies to them.

For Ottawa buyers, the takeaway is that a rebate marketed as savings can end up functioning more like a pricing mechanism for builders than a discount for purchasers, making it worth comparing a builder's "Net of HST" price against pre-rebate pricing trends in the neighbourhood before signing an agreement.

Sources: Ottawa Business Journal, Canada Revenue Agency (canada.ca)