A first-time home buyer in Alberta signs a 2026 agreement to buy a newly built home from a builder for $550,000. The buyer will live in it as their primary residence and be its first occupant. How does GST apply?
Correct Answer
B) GST of $27,500 applies, but the first-time home buyer rebate can refund all of it
GST of 5% applies to a new home sold by a builder (Excise Tax Act s. 165(1)): 5% of $550,000 is $27,500. The standard new housing rebate in s. 254(2) is not available because the price is not under $450,000, but the first-time home buyer rebate in s. 254(2.1) applies to agreements made after March 19, 2025 and before 2031 where the price is up to $1,000,000; it equals the lesser of $50,000 and the GST paid, less any standard rebate, which here is the full $27,500.
Why This Is the Correct Answer
GST is 5% of $550,000, or $27,500. The standard rebate is unavailable above $450,000, but the first-time home buyer rebate in s. 254(2.1) covers the lesser of $50,000 and the tax paid for homes up to $1,000,000 when the other conditions are met, so it can refund all $27,500 for this buyer.
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