02 Apr GST Exemption Is Just the Beginning: What More Can First-Time Buyers Expect?

The Canadian federal government’s recent pledge to remove the 5% Goods and Services Tax (GST) on new homes under $1 million for first-time homebuyers has made headlines—and for good reason. With affordability at the forefront of national concern, this measure could offer substantial savings, especially in high-growth regions like Abbotsford, Surrey, Langley, and other parts of the Fraser Valley.

But government officials have made it clear that the GST exemption is not a standalone solution. It’s part of a larger strategy aimed at boosting housing supply, improving affordability, and helping new buyers enter the market. Understanding what this means now—and what might come next—is key for buyers planning to make a move in 2025 and beyond.

Let’s break down what the GST exemption does, why it matters in British Columbia, and what additional policy support may be on the horizon.

What Is the GST Exemption and Who Qualifies?

The proposed GST exemption, announced in March 2025 by Prime Minister Mark Carney, is a direct response to the growing affordability crisis. It would apply to newly built homes priced under $1 million, purchased by first-time buyers.

Previously:

• A full GST rebate was available only for homes priced below $350,000.
• A partial rebate was offered for homes priced up to $450,000.
• Beyond $450,000, buyers had to pay the full 5% GST on the purchase price.

In today’s housing market—where the average new condo in Surrey or Langley starts at $600,000, and new townhomes or detached homes in Abbotsford often push close to $900,000—those limits were no longer useful. Most first-time buyers were excluded from federal tax relief, even in relatively more affordable areas outside Vancouver.

This new policy addresses that gap by removing the 5% GST entirely for first-time buyers purchasing new homes up to $999,999, providing direct savings of up to $50,000.

The Local Impact: Abbotsford, Surrey and Surrounding Markets

Buyers in the Fraser Valley have already faced mounting barriers to entry over the past several years. While these regions have been seen as more affordable than Metro Vancouver, steady price appreciation, rising mortgage rates (especially in 2023–2024), and increased development costs have made it harder for first-time buyers to qualify.

Here’s how the GST exemption changes the equation for local buyers:

Lower Upfront Costs

Removing the GST on a $900,000 new home in Surrey, for example, cuts out $45,000 in tax. That amount could be redirected toward:

• The down payment
• Legal fees and closing costs
• Immediate renovations or furnishings
• Reducing the total amount borrowed (and thus lowering mortgage payments)

This alone could make the difference between qualifying or not for many first-time buyers under Canada’s strict mortgage stress test rules.

More Interest in New Builds

The policy is designed specifically to encourage the purchase of newly constructed homes, with the goal of stimulating demand for new supply and supporting builders. In Abbotsford, Langley, and parts of Chilliwack, numerous new developments are in the pipeline, including townhome complexes, mid-rise condos, and single-family subdivisions.

Expect an increase in buyer activity for:

• Presale units in newer developments
• Move-in ready new homes from builders offering incentives
• Smaller homes or suites that fall just under the $1 million threshold

Price Sensitivity at the $1M Mark

This exemption is capped at $1 million, meaning homes priced even slightly above this cutoff will still include the full GST. As a result, developers and sellers may begin pricing strategically to stay under $999,999, which could:

• Increase the availability of slightly smaller or more modest homes at competitive prices
• Create a psychological price ceiling for first-time buyer-friendly properties
• Influence design decisions (e.g., fewer upgrades) to hit qualifying price points

What Policies Could Follow the GST Exemption?

While the GST measure is significant, it’s unlikely to solve the affordability issue on its own. The federal government has acknowledged this and signaled that more policies are coming—some of which may be introduced before the upcoming election.

Here are several initiatives that first-time buyers should watch for:

1. Down Payment Assistance Programs

There is speculation that the government could introduce shared equity programs or matching grants to help buyers with down payments, especially in high-cost regions like the Lower Mainland.

Incentives might include:

• Federally backed loans to reduce upfront down payment requirements
• Interest-free loans repayable only upon sale or refinance
• Matching contributions for buyers with RRSP savings

This would be especially beneficial for younger buyers who may have steady income but limited savings due to high rental costs.

2. Extended Amortization for Insured Mortgages

Currently, insured mortgages in Canada are capped at a 25-year amortization. New policy changes may allow first-time buyers to access 30-year amortizations on insured mortgages, reducing monthly payments and easing debt servicing ratios.

This would help more buyers qualify under today’s stress test rules.

3. Fast-Tracking Laneway and Secondary Suites

In an effort to increase supply quickly, the federal government may offer incentives or funding to support:

• Conversion of single-family homes into multi-unit dwellings
• Construction of legal basement suites or laneway homes
• Municipal initiatives that streamline zoning and approvals

This could open new opportunities for buyers to purchase homes with rental income potential, helping them qualify for larger mortgages while contributing to rental housing supply.

4. CMHC-Backed Green Home Incentives

We may also see new programs aimed at energy-efficient new construction. Builders and buyers could benefit from:

• Green financing with lower rates for energy-efficient homes
• Tax credits or rebates for eco-friendly upgrades
• Accelerated permit processing for sustainable developments

In places like Abbotsford and Surrey—where newer subdivisions are being built from the ground up—green building incentives could become a deciding factor for developers and buyers alike.

Market Outlook for First-Time Buyers in 2025

Even as rates have started to come down, affordability remains a long-term challenge. The GST exemption provides an immediate benefit, but first-time buyers still face hurdles including:

• Rising property values
• Competition in popular neighbourhoods
• High qualifying rates under the mortgage stress test
• Limited inventory under the $1 million cap

That’s why planning ahead is crucial. Buyers should be preparing now by:

• Getting pre-approved for a mortgage
• Tracking new developments and presale opportunities
• Setting budgets that align with potential upcoming incentives
• Exploring mortgage strategies like short-term fixed or hybrid products

What First-Time Buyers Can Do Now

With the GST exemption likely on the horizon and more federal incentives expected to follow, first-time buyers in Abbotsford, Surrey, and nearby areas have a unique window of opportunity. But timing, preparation, and access to the right information will be key.

Here are some actionable steps first-time buyers can take now to be ready when new programs launch:

1. Get Pre-Approved Early

Getting a mortgage pre-approval provides two critical advantages:

• It lets you know how much you can afford before shopping
• It locks in a rate for up to 120 days, protecting you from short-term fluctuations

A pre-approval also makes you a more attractive buyer in competitive markets like South Surrey, Langley, or Mission.

2. Monitor New Developments

With the GST exemption applying only to new construction, buyers should focus on:

• Presale opportunities in new subdivisions or multi-family buildings
• Builder promotions offering added incentives (e.g., upgrades, appliance packages)
• Projects targeting price points just under the $1 million cap

In areas like East Abbotsford or Clayton Heights in Surrey, developers may adjust inventory and unit designs to meet buyer demand within this threshold.

3. Explore Mortgage Options

With the gap between fixed and variable mortgage rates narrowing in 2025, it’s a good time to revisit your mortgage strategy. First-time buyers might consider:

• Short-term fixed rates, which offer rate stability while keeping options open
• Variable rates, which may benefit from further Bank of Canada cuts
• Hybrid mortgages, combining fixed and variable elements for flexibility

A mortgage broker can help assess these options and find the best fit based on your financial profile.

4. Prepare Financial Documents in Advance

If new federal assistance programs are introduced, buyers will likely need to qualify quickly. Make sure to have:

• Recent pay stubs and employment letters
• Up-to-date credit report
• Records of savings, RRSPs, or gift funds
• Tax returns if self-employed

Getting your documentation organized ahead of time will allow you to act fast when new incentives roll out.

FAQs – GST Exemption and Future Incentives for First-Time Buyers

Will the GST exemption apply retroactively?

As of now, the proposed exemption is not retroactive. It will likely apply only to purchases made after the legislation is passed. If you’re in the process of buying a new home, stay in touch with your lender and builder for updates.

Does the exemption apply to resale homes?

No. The exemption is intended only for newly built homes purchased directly from a builder or developer. Resale homes are not subject to GST and therefore are not affected by this policy.

What defines a “first-time buyer” in Canada?

Generally, a first-time buyer is someone who has not owned a home in the last four years. However, definitions can vary by program. The federal government typically uses the CRA’s definition for eligibility.

Can I still qualify if I’m buying with a partner who has owned a home?

If one co-buyer has previously owned a home, eligibility may depend on whether they meet the four-year rule. Some programs require all buyers to qualify as first-timers; others are more flexible. Always check specific program guidelines.

How do I find new builds that qualify for the exemption?

Start by speaking with local builders and developers in your area. Many will begin marketing their qualifying inventory under the $1 million cap. You can also work with a real estate agent who specializes in new construction properties.

Are there income limits for the GST exemption?

As of now, there are no income restrictions attached to the GST exemption. It is based on buyer status and home price. However, if new affordability programs are introduced, some may include income-based criteria.

Will home prices rise because of the exemption?

Possibly. Some market analysts suggest that increasing purchasing power could put upward pressure on prices in the short term. However, if accompanied by increased housing supply, the market impact could be neutralized or even improve affordability over time.

What if my new home is priced slightly over $1 million?

Unfortunately, homes priced above $999,999 will not qualify for the exemption—even by a small margin. Buyers and builders may look for ways to adjust specifications or upgrades to bring prices within the qualifying range.

Final Thoughts

The federal GST exemption is a meaningful step toward addressing Canada’s affordability crisis, particularly for first-time buyers in rising markets like Abbotsford, Surrey, Langley, and Maple Ridge. By lifting a significant tax burden on new home purchases, it improves access and creates new incentives for both buyers and builders.

But this is only one piece of the puzzle. Additional federal policies—focused on down payment assistance, rental suite development, longer amortizations, and energy-efficient housing—could make an even bigger difference in the months ahead.

For now, first-time buyers should focus on:

• Tracking new construction opportunities under $1 million
• Preparing financially with pre-approvals and documentation
• Staying informed as new housing measures are announced

Whether you’re actively house-hunting or just beginning to plan, it’s a smart time to speak with a mortgage advisor and start building a strategy around what’s already available—and what’s coming next.