“In this world nothing is certain but death and taxes.” – Benjamin Franklin
Not a concept we like, but one that we have to live with. In line with Benjamin’s quote HST will take effect on July 1st, 2010 and I know a lot of you are curious as to how this affects you and your plans when it comes to buying and selling Real Estate.
HST will combine the Provincial Sales Tax of 8% percent with the Federal Tax of 5% percent, to create a new “harmonized” tax of 13% percent that will now be applicable to real estate services which were at one time subject only to either the Provincial, or Federal Tax. The bright side to all of this is that there is no HST tax payable on the sale of a resale home (residential) however, under HST buyers and sellers will be paying a higher tax on the services associated with the average transaction. Here is a list of how HST affects you from a selling prospective, and from a buying prospective.
As of July 1st, 2010 if you are the seller your home there will be a 13% (HST) tax payable on:
- Real Estate Commission (currently only a 5% GST tax)
- Lawyer Fee (currently only a 5% GST tax)
- Condominium Status Certificate (Total can not exceed $100)
If you are a home buyer as of July 1st, 2010 then a tax of 13% (HST) will be payable on:
- Home inspection (currently only a 5% GST tax)
- Cost of Movers Hired
- Cost of CMHC premium for “high ratio” mortgages ( traditionally taxable for 8% PST)
Weather you are on the buying or selling side of a resale transaction the service based cost will be on the rise. OREA (Ontario Real Estate Association) has estimated that the HST will add $1,449 in new taxes to an average resale home costing $302,354.
For those of you buying new home construction the purchase of the home is subject to HST meaning your costs are considerably higher however, at the same time there are tax rebates being offered. All new home buyers in Ontario will receive a 75% percent rebate on the provincial portion of the new HST tax on the first $400,000 they spend.
Unfortunately costs are rising in all areas of the Real Estate transaction but like every change we have occurred in our history it is something we will eventually accept and move on with.
- Andrew Costa
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