Harmonized Sales Tax (HST) to start July 2010
If you're wondering how Ontario's Harmonized Sales Tax will affect real estate transactions and home ownership in London, I hope the following information will be helpful.
In its 2009 Budget, the Government of Ontario proposed a single value-added Harmonized Sales Tax (HST) to replace the existing Goods and Services Tax (federal GST) and Provincial Sales Tax (PST), effective July 1, 2010. On December 9, 2009, the Provincial Government passed the enabling legislation.
The HST rate will be 13% (with some exceptions that apply more to business than consumers). Of the 13% HST, the provincial portion will be 8% and the federal portion 5%. The HST is to be administered by the federal government.
So how will we be affected?
For starters, real estate buyers and sellers will pay 13% in HST (8% more than at present) on legal fees, appraisals, real estate commissions, home inspections, title insurance, mortgage insurance premiums, energy audits, moving costs, land surveys, etc.
The increased tax will also apply to labour on home renovations, cleaning services, lawn maintenance, landscaping, snow removal, etc. All of us will pay HST on home energy costs, not to mention hundreds of other products and services previously exempt from PST that will now become eligible for taxation at the HST rate.
The HST will not apply to the purchase price of resale homes.
The HST will apply to the purchase price of new homes. On new homes over $400,000, buyers will pay significantly more tax. However, new homes priced up to $400,000 that are purchased as primary residences may be eligible for rebates up to a maximum of $24,000. The Bill also includes transitional rules that will apply to the dates of written agreements and final possession on purchases of new homes.
For more information about the Harmonized Sales Tax in Ontario, you can visit http://www.rev.gov.on.ca/en/taxchange/index.html
If you have questions or comments about the HST, I'd like to hear from you. budloughin@royallepage.ca
