By Laura Quinn
As many of you have heard the provincial government has implemented a plan to combine the GST and PST into one harmonized tax (HST) for almost all goods and services beginning in July, 2010. Many people have asked us how this will impact the real estate market so here are the straight facts.
Under a harmonized sales tax (HST), all home buyers and sellers will have to pay extra tax on a range of services associated with real estate transactions such as legal fees, moving costs, real estate commissions and home inspection fees. Currently, consumers only pay the 5% Goods and Services Tax (GST) on these services compared to the new HST which will now be 13% (GST 5% + PST 8%).
Does is matter if I buy a New home or Resale home – The actual purchase price on resale properties will not be affected however if you are in the market to purchase a new home make sure you know the rules of the game. The tax rate when purchasing a new home under $400,000 in the province of Ontario will not be impacted by the tax and new homes between $400,000 and $500,000 will receive a rebate on the additional tax increase. However, New homes that are priced over $500,000 which are the majority of homes in the city of Toronto will now be taxed at the full 13% HST rate which is an increase of 8% compared to just paying the 5% GST right now.
Laura Quinn is a Sales Representative with Royal LePage R.E.S./Johnston & Daniel Division. Laura is a regular blogger with Muddy York.
