HST Adds to the Cost of a New Home
By Brian Madigan LL.B.
The Province of Ontario has introduced legislation to combine the eight percent Provincial Sales Tax with the five percent federal Goods and Services Tax, creating a 13 percent Harmonized Sales Tax (HST).
It is proposed that the HST will come into force July 1, 2010.
Purchasers of real estate will face additional taxation, including:
• taxes upon certain services including moving costs, legal fees, home inspection fees, mortgage insurance premiums, title insurance, and real estate commissions (all of which were previously exempt under the PST; and,
• additional taxes upon the purchase price of newly constructed homes.
Application to Residential Properties
• HST will not apply on the purchase price of re-sale homes.
• HST would apply to newly constructed homes.
• a rebate is proposed so that new homes across all price ranges would receive a 75 per cent rebate of the provincial portion of the single sales tax on the first $400,000.
For an $800,000 new home, this would be an additional $40,000, and for a million dollar home, this would be and additional $56,000. That’s a significant new tax.
Brian Madigan LL.B., Broker is an author and commentator on real estate matters, Royal LePage Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com
