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 | The Harmonized Sales Tax (HST)
and Real Estate |
| The HST is effective July 1, 2010. The following are some basic tips about the HST and its application to real estate transactions and traditional products / services.. | - HST =13% (Combination of the current 8% Provincial Sales Tax and the 5% federal GST creating a 13% Harmonized Sales Tax - HST)
| | HST WILL apply to: | - SERVICES: the services associated with the purchase of new homes and re-sale homes such as real estate commissions, legal fees, home inspection fees and moving costs.
| - NEW HOMES: the purchase of newly constructed or substantially renovated homes (homebuyers' will be able to claim a rebate of some of the provincial portion of the tax for new homes priced up to $500,000)
| - NEW CONSTRUCTION: a builder's sale of a newly constructed or substantially renovated residential complex (including apartment buildings and condominiums) commercial property rentals and leases.
| | HST WILL NOT apply to: | - RESALE HOMES: the purchase of re-sale homes
| - GST EXEMPT FEES: Sale of housing that has been previously occupied by an individual as a place of residence (and that is exempt from GST would also be exempt for purposes of HST) Such as... residential rent; condominium fees; home insurance (which had been subject to provincial tax, but not GST); mortgage interest costs.
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Home Purchase Summary Chart: | Transaction | GST Taxable | Retail Sales Taxable | New HST | | ReSale Homes | No GST | No RST | No HST | | New Homes Up to $400,000 | 5% | No RST | No change (3) | | New Homes Over $400,000 | 5% | No RST | Yes (3a) | | Real Estate Service Commissions | 5% | No RST | Yes (change to 13%) |
| (3) The new housing rebate will be 75% 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 $400,00 will, on average, pay no more tax than under the Retail Sales Tax (RST) system. However, applicable RST on building supplies is embedded in the price of the home. | | (3a) New homes purchased as primary residences, valued at $400,000 or more, will be eligible for the maximum new housing rebate of $24,000. |
ReSale Home Purchase Examples:
| Transaction | GST Taxable | Retail Sales Taxable | New HST | | Resale Home Price $200,000 | $0 | $0 | $0 | | Real Estate Service Commission [eg. $10,000] | 5% = $500 | $0 | 13% = $1,300 | | | | | | | Resale Home Price $500,000 | $0 | $0 | $0 | | Real Estate Service Commission [eg. $25,000] | 5% = $1,250 | $0 | 13% = $3,250 |
HST may affect other items in Ontartio. >>Click HERE to view a chart of how the HST will or will not apply to other items to purchase. |
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