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How the New HST Tax Could Affect New and Resale Housing in Toronto & GTA

HST Update as of June 22, 2009 

hst tax on housingWhile the new Harmonized Sales Tax (HST) has not yet come into effect, home buyers and sellers should keep an eye on the provincial governments progress.   The main objective is to combine the current 8% Provincial sales tax with the 5% federal GST tax, creating a new 13% harmonized tax - the new HST tax.

In June 2009 the provincial government announced some proposed changes to the way it will handle the HST on the purchase price of "newly" constructed housing.  Again, this is not yet in effect, and if passed it will not begin until July 1, 2010.

New Housing Rebates - Who will pay this new tax?

• HST will not apply on the purchase price of re-sale homes.
• HST will however apply to services such as moving cost, legal fees, home inspection fees, and REALTOR® commissions. 

Yes this tax will affect resale properties indirectly with the additional costs added to the services associated with buying and selling a home.   So it's not just a concern for "new home" buyers.

When looking to purchase a new home, consideration will need to be given to more closing costs on services as well as an additional price tag on the sale price. 

After a lot of debate and opposition from the real estate boards the provincial government reconsidered some of the application of the new HST tax.

The Cost for "New" Housing (not applicable to resale):
Under the new proposal, all price ranges would receive a 75 percent rebate on the provincial portion of the single sales tax on the first $400,000. up to a maximum rebate of $24,000.
For new homes under $400,000 therefore would not be subject to this additional new tax.

Its a race again, reminds me of the day when the provincial government introduced the Toronto Land Transfer tax.  There was a flurry of sales taking place to beat the deadline and save on the tax.
The new HST tax will not apply to sales of new homes where ownership or possession is transfered before July 1st, 2010.

Again, these details are only in the proposed stage.  If you are interested in more details kindly visit the provincial government site.

If you have a question, give us at a call at our Toronto Sutton Office 416-896-3333 or check back to our blog for further updates as we receive them.

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Comments

Toronto Real Estate Blog - GTA News said:

X Condomiums, Toronto

# November 27, 2009 12:47 AM

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# February 9, 2010 12:48 AM

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# February 19, 2010 3:08 AM
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