July 1: How The HST Will Apply

This week, I thought I’d keep it brief, and focus on a topic which is about to be near and dear to all of our hearts (and pocketbooks) – the HST. The HST will be rolled-out this week on July 1, and some important changes will be taking effect with respect to real estate transactions and taxation.

Here is the new tax landscape, in summary:

Resale Homes

Before July 1, 2010: No GST, and no PST.

After July 1, 2010: No HST.

New Homes Up To $400,000

Before July 1, 2010: GST taxable at 5%, no PST.

After July 1, 2010: HST taxable, but with certain special provisions to apply.

From the Ontario Government’s website: “The new housing 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 PST system. However, applicable PST on building supplies is embedded in the price of the home.”

New Homes Over $400,000

Before July 1, 2010: GST taxable at 5%, no PST.

After July 1, 2010: HST taxable, but with certain special provisions to apply.

Again, new homes purchased as primary residences, valued at $400,000 or more will be eligible for the maximum new housing rebate of $24,000.

Realtor Commissions, Legal Fees, Home Services, etc.

Before July 1, 2010: GST taxable at 5%, no PST.

After July 1, 2010: HST taxable at 13%.

You are encouraged to remember that all of these changes will take a bit of getting used to, but are designed to help stimulate business in Ontario by providing more tax ‘pass-throughs’. Only time will tell if it works, but in the meantime, staying up on where the HST does and does not apply will help you make educated choices regarding your investments.

Are you looking to buy or sell Toronto real estate this spring? Call my office today and we’ll get you started out right.

Until next time,

Shaun Nilsson
1-888-712-7888

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