HST on Resale
There have been several questions over the past few months on “How will the new HST affect the resale market.” I wanted to try and show on paper the cost to both the buyer and seller on a typical single family home in Peterborough selling for $225,000.
Below are the costs to the buyer in this transaction with a down payment of 5%.
|
Taxable
Service
|
Current Tax
Payable
|
HST Tax
New Taxes
|
Total
Payable
|
|
Mortgage Insurance Premiums
|
$336.66
|
$538.65
|
$875.31
|
|
Legal Costs
|
$50.00
|
$80.00
|
$130.00
|
|
Home Inspection
|
$16.25
|
$26.00
|
$42.25
|
|
Title Insurance
|
$24.00
|
$15.00
|
$39.00
|
|
Total
|
$426.91
|
$659.65
|
$1086.56
|
In the above example the buyer purchasing a resale home at a cost of $225,000, with 5% down on a 35 year amortization will pay an additional $659.65 in taxes than they are currently paying
|
Taxable
Service
|
Current Tax
Payable
|
HST Tax
New Taxes
|
Total
Payable
|
|
Real Estate
Commission
|
$562.50
|
$900.00
|
$1462.50
|
|
Legal Costs
|
$50.00
|
$80.00
|
$130.00
|
|
Total
|
$612.50
|
$980.00
|
$1592.50
|
In the above example, the seller would have $980.00 in new HST taxes, based on a selling price of $225,000 with a commission of 5%
It’s important for all of us to understand how HST will affect our business. There is widespread misperception that the HST will be added to total purchase price of a resale, which is not the case.
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Constantine Isslamow -
Real Estate Broker
Century 21 United Realty Inc. Brokerage
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Posted by Constantine Isslamow
on February 27, 2010