As near as one can tell, with the oncoming HST in Ontario and BC, the cost of selling real este will go up for all services attached to the sale of resale homes. In BC, land and new homes over $525,000 will have to be subject to the full 12% tax for homes less $26,250, with a graduated reduction for lower amounts. New homes below $350,000 would pay about 3.4% provincially and receive the current federal GST rebate off the current 5%. As this is all built into the sale price by the builder, this effectively means the buyer is paying a sales tax on all labour and materials. New homes costs will be impacted significantly. In Ontario, the rate is 13% and there will be rebates on new homes over $400,000 of up to $24,000.
The overall effect will be that we will see a marked slow down initially in sales of new homes, and a loss of jobs. In the long term, prices will rebound and become very cyclical Up sharply when vacancy rates plummet, followed by sharp drops when housing values rise to quickly, making real estate investment very risky and for many unaffordable. Real estate sales in general will be much slower overall because of all the related costs to buy and sell.