GST relief on new homes could save 1st-time buyers up to $240 on mortgages: report

A new analysis says first-time Canadian homebuyers could save up to $240 on their monthly mortgage payments through the federal government's proposal to waive the sales tax on new builds.

Desjardins Economics says in a new report that the impact on housing affordability will be "particularly strong" for buyers in Canada's more expensive markets, like Toronto and Vancouver.

The Liberal government has tabled legislation to eliminate the GST portion from new home sales of up to $1 million for first-time buyers, which works out to as much as $50,000 off the cost of a new build or substantially renovated unit.

For homes sold above $1 million, the GST relief is phased out as the price tag nears $1.5 million.

But Desjardins also cautions that the policy could drive up demand for housing, which in the near-term could push up home prices if not coupled with other efforts to boost supply.

Parliament has yet to pass the legislation, which the Liberals introduced alongside the government's pledge to cut income taxes starting July 1.