In July 2010, Ontario will be implementing the merge of GST and PST into the single federally-managed Harmonized Sales Tax (HST). Because of the high value of homes, the real estate industry will see its effects most dramatically.
Like everything else, it’s good news and bad news. The bad news is that what was once not subject to Retail Sales Tax will now be. The good news is that because it is configured like the GST, most of us will be entitled to some relief that we did not have before.
Under the new rules there will be increased costs to the consumer of residential real estate. On the purchase of a non-substantially renovated residential resale, where no input tax credit has been claimed, the consumer will face increases in costs generated by the new HST. The following are some that will be subject to the HST:
- Legal Fees
- High ratio insurance premiums
- Fire insurance premiums
- Home inspection fees
- Moving costs
- Appraisal fees
- Title Insurance
On the purchase of a new home from the builder, never having been occupied, there will be HST payable. The buyer, however, will be able to take advantage of a New Housing rebate up to an amount of $24,000.
On the sale of new homes, the date of the Agreement is important. Generally, sales of newly constructed or substantially renovated homes under written Agreements of Purchase and Sale entered into on or before June 18, 2009 would be grandparented, such that these sales would not be subject to the provincial portion of the single sales tax where both ownership and possession of the homes are transferred after June 2010. Therefore, if the Agreement of Purchase and Sale was entered into prior to June 2009, then there would be no further implications regarding the HST.
For more detailed information, visit www.fin.gov.on.ca or www.rev.gov.on.ca
Information provided by:
Trusted Mortgage Advisor
Kitchener – Waterloo and Surrounding Area