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Build Before March 31, 2027: Up to $130K in HST Relief and a 54% Cut to Ottawa Development Charges
If you are planning a custom home in Ottawa, the next six months are the cheapest window to start in years. Two separate programs are stacking up at the same time: Ontario's temporary HST relief on new homes, worth up to $130,000, and the City of Ottawa's 54% cut to residential development charges, worth about $30,000 to $34,000 on a single detached home.
The HST relief has a hard deadline. For a custom home built on your own lot, construction has to begin by March 31, 2027. With design, engineering and permitting in Ottawa taking several months, homeowners who want in need to start planning now.
Here is what each program actually offers, who qualifies, and what it means for custom homes and coach houses.
1. Up to $130,000 in HST Relief on a New Home
On March 25, 2026, Ontario announced enhanced HST relief on new homes, delivered with the federal government. It has two parts that work together:
- Ontario Enhanced New Housing Rebate: up to 100% of the 8% provincial portion of the HST, to a maximum of $80,000. It is administered by the Canada Revenue Agency.
- Ontario New Home Affordability Payment: a top-up covering up to 100% of the 5% federal portion, to a maximum of $50,000. You receive it automatically once you qualify for the rebate above.
Together that is up to $130,000, and unlike earlier programs, you do not have to be a first-time buyer. The relief scales with the value of the home:
| Value of the home (including land) | HST relief available |
|---|---|
| $1,000,000 or less | Full 13% HST paid, up to $130,000 |
| $1,000,000 to $1,500,000 | Up to $130,000 ($80,000 provincial plus $50,000 federal) |
| $1,500,000 to $1,850,000 | Partial relief, reducing as value rises |
| $1,850,000 or more | Not eligible for the enhanced relief |
How it works for a custom home on your own lot
If you own the land and hire a builder, the CRA treats you as an owner-builder. You still pay HST on the construction contract, then claim it back through a rebate application once the home is substantially complete. To qualify:
- Construction must begin between April 1, 2026 and March 31, 2027.
- The home must be substantially completed before 2030.
- The fair market value of the finished home, including the land, must be under $1,850,000.
- It must be the primary residence of you or a relation. Cottages, investment properties and spec homes do not qualify.
As an example, a $750,000 construction contract carries $97,500 in HST. If the finished home and lot are valued at $1.5 million or less and it becomes your primary residence, the full $97,500 can come back to you.
If you are buying from a builder
For a new home bought under an agreement of purchase and sale, the agreement must be signed between April 1, 2026 and March 31, 2027. Agreements signed before April 1, 2026 and amended later do not qualify.
2. A 54% Cut to Ottawa Development Charges
Development charges are the City fees that fund roads, sewers, transit and other infrastructure for new homes. For a single detached house they are one of the largest non-construction costs in a custom home budget.
On July 15, 2026, Ottawa City Council approved a 54% cut to residential development charges as part of the federal and provincial Development Charge Reduction Program. The cut is retroactive to January 1, 2026 and runs until March 30, 2029. Based on the figures in the City staff report:
| Location | Before the cut | After the cut | Saving |
|---|---|---|---|
| Inside the Greenbelt | $55,982 | $25,752 | $30,230 |
| Outside the Greenbelt | $62,568 | $28,781 | $33,787 |
Three things to know before you count on it:
- It depends on a funding agreement. The reduction takes effect once the City signs its transfer payment agreement with the province. Confirm the current status with the City or your builder before you finalize a budget.
- Occupancy matters. Projects need occupancy by the end of March 2030 to qualify.
- Only City charges are cut. School board education development charges are separate and are not reduced.
Since November 2025, residential development charges in Ontario are paid at occupancy rather than when the building permit is issued, which also helps with cash flow during construction. See our guide to Ottawa building permit fees for the other municipal costs.
What It Adds Up To
Take the example above: a custom home outside the Greenbelt with a $750,000 construction contract, valued at $1.5 million or less with the lot, built as the owner's primary residence. The owner could recover $97,500 in HST and save $33,787 in development charges, a combined $131,287. Your numbers will depend on your contract value, the home's appraised value and its location, so run them with your accountant and builder.
What About Coach Houses?
A coach house is already in a better position than a new detached home on development charges:
- Development charges: under Ontario's Development Charges Act, one additional unit in an accessory building, such as a coach house or garden suite, is exempt from development charges where the main house has no more than two units. A qualifying coach house pays $0 in City development charges, so the 54% cut does not change anything for it.
- HST, if you rent it out: a new coach house built for long-term rental may qualify for Ontario's enhanced rental property rebate plus the same affordability top-up, again up to $80,000 plus $50,000, provided construction begins between April 1, 2026 and March 31, 2027.
- HST, if family will live in it: whether a coach house built for a relative qualifies under the owner-built rules depends on how the property is structured. Get written confirmation from your accountant or the CRA before relying on it.
For more on the costs, see how much it costs to build a coach home in Ottawa.
Why the March 31, 2027 Deadline Is Closer Than It Looks
For an owner-built home, the HST relief turns on when construction begins, not when you sign with a builder or apply for a permit. The CRA generally treats construction as beginning when excavation starts, so you should confirm the exact test that applies to your project. Before a shovel can go in the ground, most Ottawa custom homes need:
- Design and working drawings
- Structural engineering, and often a survey, grading plan and tree report
- Zoning review and, if needed, a minor variance
- A building permit
That sequence routinely takes four to eight months. Ottawa winters also limit excavation, so a home that is not ready to dig by late fall 2026 may be relying on a narrow thaw window in March 2027. Our guide on how to speed up your building permit in Ottawa covers what you can do to shorten it.
Frequently Asked Questions
Is there really no HST on new custom homes in Ontario?
Not exactly. HST is still charged, but eligible buyers and owner-builders can get up to $130,000 of it back through Ontario's enhanced rebate and the New Home Affordability Payment. On homes valued at $1 million or less, including land, that can cover the full 13%. The home must be a primary residence and construction must begin by March 31, 2027.
Do I have to be a first-time home buyer to get the HST rebate?
No. Ontario's enhanced new housing rebate for 2026 and 2027 is open to all eligible buyers and owner-builders, not only first-time buyers. First-time buyers may also qualify for a separate federal rebate, which reduces the Ontario top-up rather than adding to it.
How much are development charges on a new house in Ottawa now?
With the 54% reduction Council approved in July 2026, City development charges on a single detached home fall to about $25,752 inside the Greenbelt and $28,781 outside it. The reduction depends on the City's funding agreement with the province and runs until March 30, 2029.
Do coach houses pay development charges in Ottawa?
Usually not. Ontario's Development Charges Act exempts one additional unit in an accessory building, such as a coach house, where the main house has no more than two units.
Sources
- Ontario news release, March 25, 2026
- CRA Notice 346, Ontario Enhanced New Housing Rebate
- Ontario New Home Affordability Payment
- CBC Ottawa, July 14, 2026
- Development Charges Act, 1997
This article is general information as of September 2026, not tax or legal advice. Rebate rules are set by the CRA and the Province of Ontario; confirm your eligibility with a qualified accountant.
Start Your Build Before the Window Closes
Ottawa General Contractors designs, permits and builds custom homes and coach houses across Ottawa, and we can map your timeline against the March 31, 2027 deadline. Try our custom home cost calculator or get a free quote.
