As of the start of 2026, several policy changes affecting Canadian consumers and real estate professionals have come into effect. Below, you’ll find a summary of new and updated federal and provincial regulations that may affect both your business and your clients.

Federal Updates

First-Time Home Buyers’ Tax Rebate

Canada’s First-Time Home Buyers’ GST/HST Rebate – otherwise known as Bill C-4, the Making Life More Affordable for Canadians Act – has officially been passed. It offers significant tax relief on newly built or substantially renovated homes for first-time buyers. 

Eligible first-time buyers can recover up to 100% of the federal GST (or the federal portion of the HST) on homes valued at $1 million or less, representing potential savings of up to $50,000. For homes priced between $1 million and $1.5 million, the rebate is gradually reduced on a sliding scale. Homes valued at $1.5 million or more are not eligible for the rebate.

Key eligibility criteria include:

• You must be a first-time home buyer (meaning you and your spouse/common-law partner have not owned a home in the current year or previous four years).
• The home must be your primary place of residence.
• The property must be newly constructed or substantially renovated.
• The agreement of purchase and sale must be signed on or after March 20, 2025. Similarly, for those who build their own homes, construction must begin on or after March 20th, 2025.

The rebate is claimed under the existing GST/HST new housing rebate framework and is intended to reduce the upfront tax burden for first-time buyers entering the new construction market. Visit the Government of Canada’s website to learn more.

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Updated lending limits for income-producing residential real estate

In 2026, how lenders treat certain rental property mortgages under Canada’s existing income-producing real estate lending framework will change.

Under revised guidance from the Office of the Superintendent of Financial Institutions (OSFI), mortgages for borrowers who rely primarily on rental income to qualify will be classified as income-producing residential real estate (IPRRE). This is designed to reduce the risk associated with highly leveraged real estate investors.

Key elements of the regulation:

• Higher Interest Rates: If more than 50% of the income used to qualify for a mortgage comes from rent (rather than employment), the loan is flagged as higher risk. Banks will be required to hold more capital against these loans, which will likely result in higher interest rates and stricter terms for the borrower.
• End of ‘Double-Counting’ Income: Investors can no longer reuse the same income stream to qualify for multiple properties. Each mortgage must now stand independently based on the specific property’s cash flow or separate personal income.
• Impact: This mainly targets entrepreneurial landlords who scale quickly by leveraging one property to buy the next. It is expected to hit hardest in markets like Calgary, Edmonton, and Halifax where rental yields are high relative to property values.

In practice, this may lead to more conservative lending practices, including closer scrutiny of rental income assumptions, stronger documentation requirements and greater emphasis on the property’s ability to generate stable cash flow.

More information can be found here.

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Prohibition on the Purchase of Residential Property by Non-Canadians Act Extension (Foreign Buyer Ban)

The federal government’s Foreign Buyer Ban remains in place, with the deadline extended to  January 1, 2027 (originally set to expire in 2025). The goal is to protect housing affordability and limit foreign speculative investment in Canadian residential real estate.

Who is restricted:

• Individuals who are not Canadian citizens or permanent residents.
• Foreign-controlled corporations and private entities with significant foreign ownership.
• Violations can result in fines of up to $10,000, and courts may order the forced sale of the property.

Key exceptions:

• Multi-unit residential buildings with four or more units.
• Vacant land zoned for residential or mixed use (for development).
• Many recreational properties outside major Census Metropolitan Areas.
• Certain work permit holders and some international students who meet strict criteria.

The government is reviewing the policy ahead of 2027, with potential adjustments being considered for new construction while maintaining restrictions on existing homes. Visit the Government of Canada’s website to learn more.

Other Notable Updates

The federal and Ontario governments have launched a 10-year, $8.8 billion housing and infrastructure partnership to boost supply and improve affordability. The Canada–Ontario Partnership to Build aims to reduce development costs, accelerate construction, and invest in infrastructure, with potential savings of up to $200,000 on a new home.

A key focus is lowering development charges by up to 50% for three years, supported by cost-matched infrastructure funding to help speed up new housing projects.

The plan also introduces new tax relief for buyers of newly built homes, including:

• Removal of the 13% HST on homes up to $1 million
• Up to $130,000 in rebates for homes up to $1.5 million
• A phased rebate for homes between $1.5 million and $1.85 million

Key projected impacts include:

• $2.2 billion in tax relief
• Up to 8,000 additional homes
• Approximately 21,000 jobs created

Read more details on the Canada-Ontario Partnership to Build initiative here.

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Toronto’s Luxury Land Transfer Tax Is Increasing

The City of Toronto has introduced new graduated municipal land transfer tax (MLTT) brackets for higher-value residential real estate transactions. Starting April 1st, 2026, the changes will apply to homes priced above $3 million and increase the municipal tax rate applied to the portions of a purchase price that fall within those higher ranges.

The full MLTT structure now includes the following brackets:

• Up to and including $55,000: 0.5%
• $55,000 to $250,000: 1.0%
• $250,000 to $400,000: 1.5%
• $400,000 to $2,000,000: 2.0%
• $2,000,000 to $3,000,000: 2.5%
• $3,000,000 to $4,000,000: 4.40%
• $4,000,000 to $5,000,000: 5.45%
• $5,000,000 to $10,000,000: 6.50%
• $10,000,000 to $20,000,000: 7.55%
• Over $20,000,000: 8.60%

Because Toronto buyers already pay both provincial and municipal land transfer taxes, this change will further increase closing costs for high-end home purchases in the city. This application can be used to calculate the estimated MLTT of a property.