So you’ve decided to buy a home in Canada. Congrats! That’s a huge step. You’ve been pre-approved for a mortgage, binge-scrolling through real estate listings like it’s your new part-time job, and maybe even booked a few showings. But amid all the excitement, there’s one important thing that might not be getting enough airtime: taxes.
Yes, taxes. They’re the uninvited guest at your housewarming party—always showing up, never bringing a gift.
Buying a home is more than just affording the sticker price. There’s a string of taxes and fees that sneak up along the way—some expected, others less so. But don’t stress. We’re breaking it all down for you: what you’ll pay, when you’ll pay it, and how to (legally) pay less.
Let’s jump into it.
Key Points
- New homes are subject to sales tax (GST/HST), while resale homes generally aren’t. However, some heavily renovated homes may still be taxed as “new.”
- Land Transfer Tax (LTT) is another major upfront cost to be aware of. Costs varies by province, and may be reduced with certain rebates.
- Other hidden costs, like property tax adjustments, PST on mortgage insurance, and legal fees, can add thousands to your closing costs.
Do You Pay Sales Tax (GST/HST) On New Homes?
Let’s start with the elephant in the real estate room: sales tax. It doesn’t always show up—but when it does, it can pack a serious punch.
In Canada, if you’re buying a newly built home or one that’s been substantially renovated, you’ll likely need to pay GST (Goods and Services Tax) or HST (Harmonized Sales Tax) on top of the purchase price. This tax doesn’t usually apply to resale homes (those previously owned and lived in), so if you’re buying a classic fixer-upper or a cozy family home with a few stories to tell, you’re probably in the clear.
But brand-new homes? That’s where things change.
So, What Do You Owe—And When?
Here’s how it breaks down by region:
- In Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island, HST applies. That’s a combo of the 5% federal GST and the provincial sales tax, blended into one harmonized rate. For example, in Ontario, that’s a full 13% HST on the purchase price of a new home.
- In provinces that haven’t harmonized their sales tax (like British Columbia, Alberta, Manitoba, and Saskatchewan), you’ll pay just the 5% GST on a new home.
- In Quebec, you’ll pay 5% GST plus 9.975% QST (Quebec Sales Tax)—so almost 15% in total, depending on how it’s applied.
That’s not chump change. On a $600,000 new build in Ontario, for example, 13% HST means $78,000 in tax. Yikes.
But Wait, Is It Always Extra?
Not necessarily. In many cases, especially with large builders or developers, the listed price already includes sales tax. That’s good news. But—and this is important—don’t assume. Always read the fine print or ask directly: “Is the price HST-included?” That one question could save you a heart attack (or $70K).
| Pro tip. Sales tax can also apply to certain substantially renovated homes (think: gut jobs where only the frame remains), so even if it looks like a resale, the CRA might treat it like new construction. The bottom line? If the home is shiny, new, and smells like drywall, assume tax is on the table—and budget accordingly. |
Learn more: The Hidden Costs Of Buying A House In Canada
How To Cut Costs: The New Housing GST/HST Rebate
Okay, so you’ve just learned that buying a new home can come with a steep sales tax bill. But don’t panic—there’s a government program designed to ease that pain. Enter the GST/HST New Housing Rebate, your best friend when buying a newly built home, condo, or even a heavily renovated one.
This rebate helps you recover some (or in some cases, most) of the GST or federal portion of HST you paid on a qualifying home. It’s one of the few ways the taxman actually gives you money.
Do You Qualify?
To be eligible for the federal rebate, your new home must:
- Be used as your primary residence (either by you or a close relative).
- Have a purchase price of $350,000 or less to qualify for the full rebate.
- Be under $450,000 to receive a partial rebate. Anything over that, and the federal rebate vanishes.
For homes between $350K and $450K, the rebate is gradually reduced. Cross that $450K threshold, and it’s game over (at least federally).
But wait—there’s more. Some provinces (like Ontario, British Columbia, and Nova Scotia) also offer provincial portions of the HST rebate. In Ontario, for example, you may qualify for a rebate of up to $24,000 on the provincial part—even if your home costs up to $350,000 to $500,000.
How Do You Apply For It?
In many cases, the builder takes care of it for you. They’ll factor the rebate into the purchase price and handle the paperwork. You’ll see a note in your agreement of purchase and sale saying the price is “net of rebate,” which means they’ve already claimed it on your behalf.
But if the builder doesn’t do this (or you’re building the home yourself), you can apply directly through the Canada Revenue Agency. You have up to 2 years from your closing or possession date to submit your claim.
Bottom Line?
If you’re buying new, don’t leave money on the table. Between federal and provincial rebates, you could claw back thousands. That’s money better spent on furniture—or a fridge that doesn’t come standard with the builder’s “basic” package.
Learn more: GST/HST New Housing Rebate: What You Need To Know
Land Transfer Tax: The Sneaky Big One
Let’s talk about a tax that quietly crashes your closing day party: the Land Transfer Tax (LTT). It doesn’t get as much attention as sales tax or mortgage interest, but trust us—this one can sting just as much. And unlike your mortgage, which is paid off over decades, the land transfer tax is due upfront, in full, when you get the keys.
What Is It?
Land transfer tax is exactly what it sounds like: it’s a fee you pay the government for the privilege of transferring land (i.e., buying a home). It’s a one-time tax based on the purchase price of the property, and in most provinces, it’s calculated on a sliding scale. The more expensive the property, the higher the tax.
Every province handles it differently, and some municipalities even pile on their own version.
How Much Will You Pay?
Here’s a breakdown of how it works in popular provinces:
| Onatrio | Starts at 0.5% on the first $55,000 and increases to 2.5% for homes over $2 million. |
| Toronto | Oh joy, there’s a second land transfer tax—equal to the provincial one. So if you’re buying in Toronto, you’re paying double. |
| British Columbia | 1% on the first $200,000, 2% on the next $1.8 million, and up to 5% on anything over $3 million. |
| Quebec | They call it the “Welcome Tax” (how polite), and it ranges from about 0.5% to 3%, depending on the municipality and the sale price. |
| Alberta & Saskatchewan | Surprisingly, these provinces don’t have a formal LTT, just smaller registration fees (usually a few hundred bucks). Lucky you! |
Can You Avoid It? First-Time Buyer Relief
If you’re buying your very first home, don’t despair. Many provinces offer rebates. For example:
- In Ontario, first-timers can get up to $4,000 back on the provincial LTT.
- In Toronto, you can also get up to $4,475 back from the municipal side.
- British Columbia offers a full exemption if your home is under $500,000 (with a partial exemption up to $525,000).
These rebates can significantly reduce the bite, but they won’t cover everything—especially in high-cost markets.
Bottom Line
Land transfer tax is one of the biggest hidden costs of buying a home. It’s easy to overlook when you’re focused on down payments and interest rates—but ignore it at your peril. In some cases, it can be tens of thousands of dollars due on closing day.
So, plan for it early, and if you’re a first-time buyer, take every rebate you can get. Your future self (and your bank account) will thank you.
Property Tax: Not Just A Once-A-Year Thing
You’ve probably heard of property tax, the annual fee homeowners pay to the city for things like garbage pickup, schools, and public libraries. But what many first-time buyers don’t realize is that you might owe property tax at closing, too.
Here’s why:
- If the current owner has already paid for the whole year, you’ll need to reimburse them for the portion that covers your ownership period.
- If they haven’t paid yet, you might take over that responsibility.
It’s all prorated. Your lawyer will calculate it during closing.
Oh, and don’t forget, you’ll be on the hook for the ongoing property tax every year. Rates vary by municipality and are based on the assessed value of your home (done by MPAC in Ontario, BC Assessment in British Columbia, etc.).
Do You Pay Tax On Mortgage Insurance?
If you’re buying a home with less than 20% down, you’ll be required to get mortgage default insurance, usually through CMHC, Sagen, or Canada Guaranty. This insurance protects the lender if you default on your mortgage, and the premium is typically rolled into your mortgage payments.
But here’s where it gets tricky: while the insurance premium itself isn’t taxed federally, certain provinces charge provincial sales tax (PST) on it, and it’s not rolled into your mortgage.
In Ontario, Quebec, and Saskatchewan, you’ll need to pay that PST out of pocket at closing. For example, if your CMHC premium is $10,000, you’ll owe an extra $800 in Ontario, $997.50 in Quebec, or $600 in Saskatchewan, due upfront.
This can be a surprise cost for first-time buyers, so it’s important to factor it into your closing budget. Other provinces? No PST on the premium, so you’re off the hook.
Other Costs That Feel Like Taxes (But Aren’t)
Not technically taxes, but still worth budgeting for:
- Legal fees and title insurance: You’ll need a real estate lawyer—budget $1,500–$2,500.
- Home inspection and appraisal: These can run $300–$700 each.
- Development charges or levies (on new builds): These are sometimes hidden in your purchase agreement and can add up to thousands.
- Utility hook-ups and moving costs: Not taxes, but still painful.
Learn More: Closing Costs In Canada: How Much Will You Pay?
What About Taxes When You Sell?
The fun doesn’t end when you buy. Down the road, when you decide to sell your home, you might be on the hook for more taxes.
Let’s unpack it.
Capital Gains Tax: The Big One For Investors
If the home you’re selling is your primary residence, you’re usually exempt from capital gains tax. However, if it’s a rental property, vacation home, or a flipped home, expect to pay tax on 50% of the profit you make.
If you misused the primary residence exemption (e.g., claimed multiple homes), CRA might claw it back.
Note: If you’re in the business of flipping homes (even if you live in them briefly), CRA could classify your gains as business income—and tax 100% of the profit.
HST on New or Flipped Homes
If you built or substantially renovated a home and then sold it, CRA might come calling for HST—especially if you never intended to live there long term. This includes:
- Pre-construction assignments
- “Fix-and-flip” projects
- Homes sold shortly after occupancy
The rules are murky, and CRA has been cracking down. Always get professional tax advice before flipping.
Bottom Line
Buying a home is an exciting journey, but it’s also full of financial potholes. Taxes are a major part of that, and knowing what to expect (and what can be avoided) helps you make smarter decisions.
With smart planning and a great team (real estate agent, lawyer, maybe even a tax pro), you can minimize your costs and avoid nasty surprises.
Because in the wild world of Canadian real estate, information is your best investment.
