The 2026 Housing Affordability Guide: GST Rebates, Garden Suites, and Mortgage Helpers

However, with new opportunities come new legal complexities. At Cabinet Sauvé Law, we believe that true peace of mind comes from knowing the rules before you sign. This guide breaks down the two most significant shifts in the 2026 housing market: The "Full" Tax Rebate and the "Mortgage Helper" revolution.

The New Federal "Full" GST Rebate

If you are a first-time home buyer in Ontario purchasing a newly constructed home (including condos and townhomes) for under $1,000,000, you may now be eligible for a 100% rebate of the federal portion of the GST (5%).

• The Math: On a $1,000,000 home, the GST is $50,000. Under the old rules, you would have received almost nothing back. Under the 2026 rules, you could save the full $50,000.
• The Phase-Out: The rebate gradually reduces for homes priced between $1M and $1.5M. Above $1.5M, the federal rebate is no longer available.

In late 2025, the Ontario government announced it would mirror the federal move. This means eligible first-time buyers can now see a rebate of the 8% provincial portion of the HST as well.

• The Total Impact: When you combine the federal and provincial rebates, a first-time buyer on a qualifying $1M home could see a total tax reduction of up to $130,000.

The Legal Catch: This is not an "automatic" discount. It requires specific eligibility filings, citizenship/residency requirements, and a commitment to use the home as your primary residence. At Cabinet Sauvé Law, we ensure your Agreement of Purchase and Sale is structured so that you—not just the builder—receive the full benefit of these credits.

A "mortgage helper" is only an asset if it is legal. An illegal suite is a liability that can lead to insurance denials, lawsuits, and municipal fines. To be a "Legal Secondary Suite" in Ontario in 2026, it must meet several criteria:

• Ontario Building Code (OBC) Compliance: This includes minimum ceiling heights (typically 1.95m or 6'5"), interconnected smoke alarms, and specific fire separations (30-minute fire-rated drywall).
• Egress Windows: Every bedroom in a basement suite must have an "egress window" of a specific size to allow for an emergency exit.
• Zoning and Parking: While the province has streamlined rules, local municipalities like Orléans or Simcoe County still have specific rules regarding setbacks from property lines and parking requirements.

The Financial Benefit

A legal garden suite in the GTA or Ottawa region can rent for anywhere from $1,800 to $2,800 per month. For many buyers, this rental income is what allows them to qualify for a larger mortgage or pay down their principal years ahead of schedule.

1. The "Fake" Legal Suite We often see listings that say "potential for a basement apartment" or "in-law suite." Legally, this usually means the suite is illegal. If you buy a house with an existing tenant in an illegal suite, you are assuming all the liability for their safety. If a fire occurs, your insurance provider may refuse to cover the claim because you were operating an unlicensed rental unit.
2. The 2026 Radon Rules As of the latest Ontario Building Code updates, new construction and substantial renovations (like converting a garage to a garden suite) now require specific Radon Gas mitigation and testing. This is a health-focused law that can add thousands to your construction costs if not planned for early.
3. The "Owner-Occupancy" Requirement Some municipalities have rules stating that the owner must live in one of the units to be allowed a garden suite. If you are an investor looking to rent out both the main house and the garden suite, you need to check the local by-laws carefully before you buy.
4. The HST "Investment" Trap If you build a garden suite to rent it out, you are considered a "builder" for HST purposes. You may have to pay HST on the fair market value of the unit when the first tenant moves in. However, you can often claim the HST Residential Rental Rebate to offset this. Missing this filing can be a $24,000+ mistake.
   

• Agreement Review: We review your new-build contract to ensure all HST/GST rebates are properly credited to you.
• Title Verification: We ensure the zoning on your potential property actually allows for the "mortgage helper" you are planning to build.
• Construction Contracts: If you are hiring a contractor to build a garden suite, we draft the agreements that protect your deposit and ensure the work meets the Ontario Building Code.
• Lease Agreements: Once your suite is done, we provide the legal leases that comply with the Residential Tenancies Act, protecting your rights as a landlord.