What do you know about HST and home buying?
According to a survey put out near the end of 2010 by the Ontario Real Estate Association, 56% of Ontarians believe that a residential resale home purchase is subject to HST. That is more than half! I feel it is important to clear the air regarding HST and residential real estate purchases.
A residential resale property’s purchase price is not subject to HST. This misconception has now led to speculation that potential home buyers have been discouraged to enter the market, and that potential home sellers are not interested in selling, particularly during the last half of 2010. It is also important to point of that although HST does not apply to the price of a residential resale property, HST does apply to the services relating to the transaction. These services include, but are not limited to, legal fees, home inspections services, moving cost, home appraisal fees, real estate fees, and other services that home buyers and seller choose to use. It is estimated that in the typical real estate transaction in the Greater Hamilton-Burlington area, HST on these services will add approximately $1,500 in taxes. This additional tax cannot be built into your mortgage; it will need to be paid together with your fees to the service providers.
Although HST is not calculated on the purchase price of a resale home, HST may be calculated on the purchase price of a new home. However, new homes under $400,000 are exempt from this tax, and new homes between $400,000 and $500,000 are subject to proportional rebates. I suggest that you talk to your real estate professional or the builder about how HST may affect your purchase if you are interested in buying a new home.
Remember, if you are looking to buy a resale residential property, you will not be charged HST!