Everyone is asking about the effects of the new Harmonized Sales Tax on the sale or purchase of a new or resale home in Ontario. The answer is actually quite simple and should cast aside most of your fear. First, let's look at a new home purchase. New homes up to $400,000 are only subject to 5% GST with no change. Every dollar spent over $400,000 on your fabulous, new home †will be subject to the 13% HST. There is a second component of the HST on a new home and it actually comes in the form of a rebate. A New Housing Rebate will be 75% of the Ontario component of the HST (8%) up to a maximum of $24,000. Still confused? Here's an example of how it would break down on the purchase of a $500,000 new home as a primary residence. An additional tax of $8000 would be assessed on the amount over $400,000 ($500,000 - $400,000 x 8%). That portion of the HST would then be eligible for a 75% rebate ($8000 x 75%) of $6,000 leaving a net result of $2,000 in additional taxes.
So let's talk resale homes. No GST, No PST and no HST.........Yay!!!!
There is however, one side note: Real Estate commission which was GST taxable will now be subject to HST.
So fear not, we are enjoying a very robust resale market and the effects of the HST will be minimal.
HST on Real Estate...Let's Keep it Simple
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