56% mistakenly believe HST is payable on the purchase price of a resale home.
As background, CMHC’s 3rd quarter report for the Niagara resale market states that among the factors influencing a slow down in the number of sales was an expectation of higher interest rates coupled with stiffer mortgage qualifying criteria. Oddly, mortgage rates--due to a highly competitive mortgage market--have remained at all time lows.
The report didn’t mention one major culprit contributing to a slow down in sales that kicked in on July 1st--Ontario’s HST.
“It’s as if they locked the door and threw away the key,” one REALTOR® remarked.
Everywhere REALTORS® continue to go they come across people who believe that the HST applies to the purchase price of a resale home. Since July 1st, much of a REALTORS® work has involved educating consumers that no, definitely not, HST does not apply to the price of a resale. We at Century 21 Today Realty even published a series of ads with the banner “NO HST ON PURCHASE PRICE” across each resale home advertised. The misperception, though, is tough to break and continues to persist.
To drive this home, “An Ipsos Reid survey commissioned by OREA and released in October reveals that 56 per cent of Ontarians mistakenly believe that the new Harmonized Sales Tax (HST) applies to the full purchase price of a resale home.”
While HST does apply to services and fees associated with buying, it is not charged on the purchase price of a used home.
With over half of consumers are under the false impression that they would have to pay an additional 13% to the government, such confusion speaks volumes on how the HST played a major role in slowing home sales.
Dorothy Mason, President of the Ontario Real Estate Association (OREA) stated, “We’re calling on the Ontario government to launch an immediate public awareness campaign to educate taxpayers and end the HST confusion”.
A Huge Unexpected Savings
Learning that HST does not apply to the purchase price translates into an unanticipated savings of a $27,950 on the average price in Niagara of around $215,000.
The government’s failure to educate the public may have also contributed to less work in needed services and less buying of home appliances and other related purchases.