The Ontario HST and the London (Ontario) Home Buyer
By Kathy Mendham - Meathrel
The new HST tax is set to come into effect in Ontario on July 1st of this year (2010), here is a brief guide on how it will impact Home Buyers in London.
The HST is the result of the combining of the current Provincial Sale Tax (PST) with the Federal Goods & Services Tax (GST) to create a single consumption tax known as the Harmonized Sales Tax (HST). The HST will replace both the PST & GST thus on many items the HST will have no effect at all. The impact will be on the services you use, because the current PST is primarily a tax on GOODS, while the GST is, and the HST will be a tax on GOODS & SERVICES. The HST will add an 8% tax increase on many services associated with a Real Estate transaction.
The Ontario Real Estate Association estimates that the HST will add an additional $1,513 to the cost of the sale of the average Ontario home. The services that are immediately obvious with this additional fee are as follows:
- Real estate commission.
- Lawyer’s fees.
- Home inspector fees.
- Home Movers.
You will notice that the purchase price of a resale property in not on this list. There is no sales tax now and there will be NO HST ON A RESALE HOME. This is good news since the value of the property you are purchasing accounts for the vast majority of the money you are spending.
The case of a new build home is different, in that the HST will apply to all new builds that the buyer takes possession of starting July 1, 2010. This means the HST will add an additional 8% in tax to the cost of a new build.
However, recognizing the cost of this impact to buyers the provincial government has created a new housing rebate for new homes purchased as a primary residence. This new rebate will be 75 per cent of the Ontario component of the HST, up to a maximum of $24,000.
The rebate will ensure that buyers of homes priced up to $400,000 will, on average, pay no more tax than under the current system. While new homes purchases of primary residences valued at $400,000 or more will be eligible for the maximum new housing rebate of $24,000.
As always if you have any questions on this article or a home purchase or sale in London Ontario feel free to contact me*.
Kathy
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*Not intended to solicit property already for sale.
