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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The Toronto Real Estate Board (TREB) welcomes the provincial announcement on proposed changes to the Real Estate and Business Brokers Act, 2002 (REBBA) pertaining to conflict of interest issues that arise in multiple representation situations in real estate transactions.
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