Episode 204 of the daily Toronto Real Estate Musing video blog. We’re on the Beach boardwalk looking at a very special Canadian flag for Canada Day.
Unfortunately for Ontario residents, it is also the first day for when the Harmonized Sales Tax (HST) comes into effect. The 13% HST replaces the 8% Provincial Sales Tax (PST) and 5% Goods and Services Tax (GST). This means many purchases that were exempt from GST before will now cost 5% more, and those exempt from PST will cost 8% more.
For home buyers, the situation can be complicated. Here’s the basic lowdown:
Resale Homes: No HST on Purchase Price, BUT HST on Services
Resale home prices are exempt from the HST, but related services such as legal, accounting, brokerage fees and home inspections will now attract HST when previously they only attracted GST. This means those service items will now cost 8% more.
New Homes: HST for homes above $400K
For buyers of new condos and houses purchased from a builder, or those substantially renovated, HST may apply. Homes costing up to $400,000 may get up to a $24,000 tax rebate.
This will take some of the sting out of the HST. Click here to download a PDF version of the rebate application form here.
As always, we encourage home buyers to first consult with their accountants and/or lawyers to understand the exact amount of HST due at closing.
From all of us at O’Neill Real Estate, we wish you a safe and relaxing Canada Day!
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Thanks for the post.
You can find more info on the HST and home purchases here: http://www.rev.gov.on.ca/en/taxchange/homebuyers.html
The HST is part of this comprehensive tax package that will see 93 per cent of Ontarians receive personal income tax cut. With these cuts Ontario now has the lowest provincial tax rate in Canada on the first $37,106 of taxable income. In fact, 90,000 low-income Ontarians will no longer have to pay Personal Income Tax.
To help families we have introduced a permanent $260 Sales Tax Credit for low- and middle-income adults, children and seniors. In total $4.2 billion in transition payments will be delivered to help Ontarians adjust to the Harmonized Sales Tax. It is important to remember that every $100 in tax relief is equivalent to the 8% tax on $1250 in newly taxed items.
Ontario is exempting children’s clothing and footwear, infant and child care seats, diapers, books, food under $4, newspapers, and feminine hygiene products, from the provincial portion of the HST.
HI Grahame,
Thanks for that information. The reality for home buyers is that many will be subject to an additional 8% tax on the full purchase price when buying new, or fully renovated. Furthermore, buyers will be subject to an additional 8% tax on services associated with buying a house – legal, accounting, inspection, marketing and sales, etc. (always consult a tax expert to valid your individual situation).
Since homes are often one of the largest purchases an individual makes, this additional tax can be very significant.
George