GST cut means substantial savings for new home buyers

January 19, 2006

Supports construction jobs

WATERDOWN – Conservative Leader Stephen Harper today announced that the plan to cut the GST from 7 to 6 to 5 per cent will deliver substantial savings to purchasers of new or substantially renovated homes. The savings on a new home worth $200,000 would be $2,000, growing to $4,000 when the GST cut is fully implemented. The saving would be in addition to the GST rebate.[1]

“A new home is not something that you purchase every year,” Harper said. “When a family is getting ready to take that step and to make that commitment, our GST cut will make a major difference.”

In addition to supporting new home purchasers, the plan to cut the GST will also help the residential construction industry, which is facing slow growth or even slight decline over the next five years. Overall the construction industry employs more than one million Canadians, many of them in residential construction and renovation. This year, residential construction will contribute nearly $26 billion to Canada’s Gross Domestic Product (GDP).

“New home construction shows a community on the move. The sight of work crews building new neighbourhoods is a sign of our hope and our optimism about a better future for our families,” Harper said. “As we all understand, a home-owning nation is a strong nation.”

While resale homes are exempt from the GST, the purchaser of a new or substantially renovated home may currently be eligible to claim a GST rebate, provided that the new home costs less than $450,000. In addition to cutting the GST to 5 per cent, the Conservatives will maintain the GST New Housing Rebate.

“Canadians need tax cuts they can see, and tax cuts they can count on,” Harper said. “Our plan to cut the GST is a plan to lift the burden of taxation from every single Canadian.”

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[1] At 6 per cent GST, the rebate on a $200,000 home would be $4,320. At 5 per cent gst, the rebate would be $3,600.