With the housing industry struggling to recover, the provincial government has implemented a new tax plan to set the industry back yet again.
Dalton McGuinty's government's plan to harmonize the 8-per-cent provincial sales tax with the 5-per-cent federal goods and services tax will add an extra financial burden on those interested in venturing into the housing market. The new blended sales tax will add a tax burden to many household goods that are currently not subject to provincial sales tax, including the purchase of new homes above $400,000 and the closing costs on the sale of existing houses.
A $360,000 house will add approximately $2,037 to the purchase of a resale home. Resale real estate transactions are not subject to the extra tax on the home itself, just on the costs associated with closing the transactions. Home buyers who are considering purchasing a new construction home that costs more than $400,000 will be subject to the full 13% harmonized tax. New homes sold for under $400,000 are exempt from the extra taxation.
With Toronto residents recently having to swallow the double land transfer tax hit, the province is going after them again with their 13% harmonized tax. Home buyers in Toronto are often already paying $4,000 to Toronto and another $4,000 to the province for the land transfer tax. Now with the added tax due to the harmonization of sales tax, Toronto is becoming even more unaffordable.
The positive is knowing the plan is not set to take place until July 1, 2010. If you were thinking of buying in the near future, you could save yourself some money by completing your real estate transactions before July 1, 2010 to save you some money. If you are a Toronto resident, you would also want to consider moving out of the city to avoid paying the double land transfer tax. Buy moving out of the city and purchasing before July 1, 2010, you would be saving yourself approximately $6000.
For more information on buying or selling real estate in Burlington or Oakville, Ontario, or if you have questions about current market trends, mortgages or interest rate information, please visit me again on my website www.seansells.ca or call me at 905-220-9198 and I'd be glad to answer any questions to accommodate all of your real estate needs.