Building a custom home in the Lower Mainland means meeting taxes at four points in the project, not just one. You will see federal GST at 5% on a new home, BC provincial sales tax of 7% built into your materials, Property Transfer Tax if the land changes hands, vacancy-tax rules while the house sits unfinished, and a higher annual property tax once you move in. The good news lands early: a new first-time home buyers’ GST rebate can remove the 5% on a home valued up to $1,000,000 for buyers who qualify. Knowing what each tax is, roughly what it costs, and when it lands helps you budget before the first shovel goes in. This is a plain walk through every tax on a custom home construction project, in the order you meet it.
The Taxes on a BC Custom Build at a Glance
Every tax below is one line in a much larger budget, and seeing them together makes it easier to slot them into the bigger picture of where the money goes in a $2M custom home budget. The table sets out each tax, its rate, what it applies to, and when in the project it lands.
| Tax | Rate | Charged On | When It Applies |
| GST (federal) | 5% | Value of the finished new home | At completion, first sale, or occupancy |
| GST New Housing Rebate | Up to $6,300 back | GST paid, if value under $450,000 | Rarely, given Lower Mainland prices |
| First-Time Buyers’ GST Rebate | Up to 5% removed, max $50,000 | New home up to $1,000,000, phasing out to $1,500,000 | Eligible first-time buyers, primary residence |
| BC PST | 7% | Building materials | Paid by the contractor, sits inside the build cost |
| Property Transfer Tax | 1% to 5%, tiered | Value of land when title transfers | On a registered transfer such as buying a lot, not on building |
| PTT Newly Built Home Exemption | Full up to $1,100,000 | PTT otherwise owed | Qualifying newly built home or lot |
| Speculation and Vacancy Tax | 0.5% (BC residents) to 2% (foreign owners) | Vacant residential property | Exempt while genuinely under construction |
| Vancouver Empty Homes Tax | Set yearly by the City | Vacant property, Vancouver only | Exempt while permitted work proceeds |
| Annual property tax | Municipal mill rate | Assessed value | Rises after the home is re-assessed |
How GST Applies to a New Custom Home in BC
GST is the federal tax on new homes, and it applies to a custom home in BC the same way it applies to any newly constructed house. BC does not fold it into a single harmonized tax. Instead it charges the 5% GST plus a separate 7% provincial sales tax, which is why the two numbers stack rather than blend into one rate.
The 5% GST on New Construction
A newly built home is a taxable supply, so the federal government applies GST to it just as it would to any new house sold by a builder. When a builder constructs and sells you a finished home, you pay 5% GST on the value of that home, and the builder collects it and sends it to the CRA. That is the situation most custom-home clients are in, and it is the simplest to budget: one rate, applied to the finished value.
If you are a true owner-builder, hiring trades directly to build on land you already own, the tax works a little differently. There is no single sale, so the 5% accrues on your construction materials and services as they are invoiced through the project rather than as one charge on a final price. The rate is the same either way, but the builder-built case is the one to plan around unless you are managing the trades yourself.
Do You Pay GST on the Lot You Buy?
Vacant land is not automatically free of GST, and whether the lot carries the 5% turns mostly on who is selling it. A newly subdivided building lot sold by a developer or a corporation is almost always taxable, because it is sold in the course of a business. A previously used residential lot sold by an individual for personal use is generally exempt. So the same patch of ground can be taxed or not depending on the seller. Pin down the GST status of a lot in the purchase agreement before you assume either way, because a surprise 5% on the land is a large number at Lower Mainland prices.
The GST Rebates: How to Get Some or All of It Back
Two separate rebate systems can hand back some or all of the GST, and they are worlds apart in value. One is an older rebate that barely moves the needle on Lower Mainland prices. The other is a new rebate that can wipe the GST out completely. Because you carry the 5% through the build and only settle the rebate near completion, the timing also shapes how construction financing works and how much you draw.
The Traditional New Housing Rebate, and Why It Rarely Helps Here
The GST/HST New Housing Rebate returns 36% of the 5% GST you paid, up to a maximum of $6,300. You get the full amount only when the home’s fair market value is $350,000 or less, and it shrinks on a sliding scale between $350,000 and $450,000, disappearing entirely at $450,000 and above. Those thresholds were set in 1991 and have never been raised. A Lower Mainland custom home sits far above $450,000, so this rebate effectively does not reach it. It is still on the books, but for the homes built in this region it is a footnote, which is why the next rebate matters far more.
The First-Time Home Buyers’ GST Rebate, Up to $50,000 Back
This is the rebate that can actually move the number. It removes the full 5% GST on a new home valued up to $1,000,000, for a maximum benefit of $50,000, and it became law in 2025 with effect back to March 20, 2025. Two limits decide whether it reaches you, and both belong in your budget from the start rather than as fine print later. First, the relief phases out between $1,000,000 and $1,500,000 of value and is gone completely at $1,500,000, so a home above that ceiling gets nothing from it. Second, it is a first-time buyers’ rebate: you generally qualify only if neither you nor your spouse owned a home you lived in during the year or the four years before, the home is your primary residence, and you have not claimed this rebate before. Many custom-home budgets in this region run well past $1,500,000, and many buyers of a second or third home are not first-time buyers, so treat this as good news to confirm rather than to assume. Check your eligibility with the CRA or your accountant before you count the saving.
Owner-Built vs Builder-Built: Why It Changes Your Paperwork
How you build decides how the rebate reaches you. Buy a finished home from a builder and the builder usually credits the rebate straight against the purchase price, so it lowers what you pay at closing and you never handle it directly. Build as an owner-builder, hiring your own trades on land you own, and you claim the rebate yourself after the home is substantially complete, so it arrives as a payment rather than a discount. The saving can be the same size on either path; what changes is the timing. Knowing which path you are on early matters, because it shapes your cash flow in the final stretch of the build.
BC PST on Your Building Materials (7%)
BC does not charge you PST as a separate line on your build. Instead, the 7% provincial sales tax is paid by the contractor on the materials bought to construct your home, and that cost is folded into the price of the work. So on a fixed-price contract, the PST on your lumber, windows, fixtures, and finishes is already inside the number you sign, not added on at the end. This is also why BC has no provincial housing rebate: provinces that blended their sales tax into HST offer a provincial rebate portion, but BC left the HST in 2013 and charges GST and PST separately, so only the federal GST rebate is ever in play. The 7% is easy to overlook because it is buried in materials, but it is a real part of what a custom home costs in the Lower Mainland, and a fixed-price contract is the cleanest way to see the all-in figure.
Property Transfer Tax: When Building Triggers It, and When It Does Not
Property Transfer Tax is a tax on registering a change of ownership, not a tax on building. It is charged when title moves from one party to another at the Land Title Office. That single fact decides most of what follows: if the land changes hands, PTT applies to that transfer, and if it does not, building on land you already hold does not create a new PTT bill.
The PTT Rate Tiers
PTT is tiered by the value of what transfers. You pay 1% on the first $200,000 of fair market value, 2% on the portion from $200,000 up to $2,000,000, and 3% on anything above $2,000,000. On residential value above $3,000,000 there is a further 2%, so the top marginal rate reaches 5%. On a $2,000,000 lot or property, for example, that is $2,000 on the first $200,000 plus $36,000 on the next $1,800,000, for $38,000 in total. At Lower Mainland land values PTT is a meaningful line, so it belongs in the budget from the outset whenever a purchase is part of the plan.
The Newly Built Home Exemption
BC offers a Newly Built Home Exemption that can remove the PTT on a qualifying new home. The exemption is full when fair market value is $1,100,000 or less, a threshold that rose to that level on April 1, 2024, and it phases out between $1,100,000 and $1,150,000, with none at $1,150,000 or more. The parcel has to be 0.5 hectares or smaller, and you have to move in within 92 days of registering title and live there for the rest of the first year. It is aimed mainly at people who buy a newly built home or a builder-completed lot, so whether it reaches a particular owner-built file depends on how and when title registers. Have your lawyer or notary confirm it applies before you build the saving into the plan.
Do You Own the Land, or Are You Buying a Lot?
Because PTT keys off a registered transfer, the practical question is simple: are you buying a lot, or do you already own the land? Buy a lot to build on and you pay PTT on the lot’s value at purchase, because that is the transfer that triggers the tax. Already own the land, however you came to hold it, and building a home on it registers no new transfer, so it creates no new PTT bill. The finished house is worth far more than the bare lot, but PTT is not charged again just because the property gained value from being built on. How title is held can complicate this in individual cases, so confirm your own situation, but the governing rule is that clean.
Vacancy Taxes While Your Home Is Under Construction
A half-built house is not a home anyone could be living in, and the vacancy taxes are written with that in mind. A site that is genuinely under construction is generally exempt from both the province-wide tax and, inside the City of Vancouver, the city’s own version. The exemptions come with conditions, though, and one of the two taxes exists in only one municipality.
Speculation and Vacancy Tax (Province-Wide)
The Speculation and Vacancy Tax applies across much of the Lower Mainland, but land genuinely under development is exempt while eligible building activity is under way. That activity covers the real steps of a build: arranging financing, applying for permits, signing design and build contracts, clearing or excavating the site, and constructing the home. So a custom home you are actively building is generally exempt for the years it is under construction. The condition is that permits stay current and the work keeps moving, because the province looks at whether real work is happening on the file.
Vancouver’s Empty Homes Tax (City of Vancouver Only)
Vancouver runs its own Empty Homes Tax on top of the provincial one, and it applies only inside the City of Vancouver. A property undergoing major construction or redevelopment is exempt where the permits have been issued and the work is carried on diligently, without undue delay. Permits that are only pending do not qualify on that basis, and minor cosmetic work does not count as major construction. The point that matters for most readers is geography: this is a City of Vancouver tax only. A build in Richmond, Burnaby, Surrey, Coquitlam, Langley, or anywhere else in the Lower Mainland falls under the province-wide Speculation and Vacancy Tax instead.
Your Property Tax Goes Up After You Build
Once your custom home is finished, its assessed value jumps, and your annual property tax follows. BC Assessment values every property as of July 1 each year and reflects its physical condition as of October 31, so a lot or construction site one year is re-assessed as a completed house the next. Your municipal tax is calculated from that assessed value, so when it steps up from land-only to a finished custom home, the yearly bill steps up with it. This is not a penalty, just the system catching up to what now stands on the lot, but it can be a sizeable jump in the first cycle after completion. Build it into your ownership budget rather than your construction budget, because the higher bill is an ongoing cost of the finished home, and planning for it early keeps that first tax notice from being a shock.
Build With a Team That Plans the Tax Picture in Advance
Taxes on a custom build are predictable when the project itself is planned properly, and that is a large part of what a clear contract and a firm schedule are for. Our fixed-price contracts fold the PST on materials and the rest of the build cost into one number you agree to up front, so there are no surprise add-ons at the end. Our detailed build schedule keeps permits current and the work moving, which is exactly what the vacancy-tax exemptions ask for while a home is under construction. And every home we finish carries 2-5-10 home warranty coverage, so the protection continues well past the final tax reconciliation. If you want a luxury custom home builder who maps the whole tax picture into your budget from day one, we are glad to walk you through it. You can book a consultation to talk through your project and where each tax lands in your plan.
Frequently Asked Questions
Do You Pay GST When Building a Custom Home in BC?
Yes. Federal GST of 5% applies to a new home, charged on the finished home’s value when a builder constructs and sells it to you. BC does not add HST on top; it charges a separate 7% provincial sales tax instead, which the contractor pays on materials rather than billing to you as a line item.
Can You Avoid Paying GST on a New Custom Home in BC?
For eligible buyers, the first-time home buyers’ GST rebate can remove the full 5% on a new home valued up to $1,000,000, phasing out to nothing at $1,500,000. It applies only to first-time buyers using the home as a primary residence, so confirm your eligibility with the CRA or your accountant before assuming the saving.
Is There a GST Rebate for a Lower Mainland Custom Home?
The older GST New Housing Rebate rarely helps here, because it caps out at a home value of $450,000 and those thresholds have not moved since 1991. The meaningful one is the first-time home buyers’ GST rebate, which can erase the 5% entirely for buyers who qualify on a home up to $1,000,000.
Do You Pay Property Transfer Tax If You Already Own the Lot?
No. Property Transfer Tax is charged on a registered transfer of title, not on the act of building, so building on land you already own does not trigger it. Buy a lot to build on and you pay PTT on the lot’s value at purchase, and because title details vary it is worth confirming your own situation with your lawyer or notary.
Do You Owe the Speculation or Empty Homes Tax While Your Home Is Under Construction?
Generally no. A site genuinely under construction is exempt from the province-wide Speculation and Vacancy Tax while eligible building activity is under way, and inside the City of Vancouver the Empty Homes Tax has a similar construction exemption. Both expect permits to be current and the work to keep moving, so staying on schedule protects the exemption.
Do You Pay PST on Building Materials, and Is It Added to My Price?
Yes, 7%, but you do not pay it as a separate charge. The contractor pays the PST on the materials bought for your home, and that cost sits inside the build price, so on a fixed-price contract the 7% is already reflected in the number you sign rather than added on at the end.
Does My Property Tax Go Up After I Build a Custom Home?
Yes. BC Assessment re-values the property once the home is complete, using its value as of July 1 and its physical condition as of October 31, so the assessment climbs from land-only to a finished house. Because your municipal tax is calculated from that value, the annual bill rises in the first assessment cycle after completion.