The Impact of HST on Home Buyers and Sellers
Out of all the changes, the HST and it's impact on home buyers and sellers has gained the most attention and rightfully so, being that a home will be the biggest single investment that most people will make in their lives. So first we will start with the 'not so bad' news:
HST will not apply on the purchase price of a resale home- there is no tax on the sale of a resale home that is used for your primary residence. (If you are dealing with an investment property, seek professional advice from an accountant). So water cooler rumors of $40000 dollars in additional taxes when you buy a home are not quite correct.
What HST will effect?
Where you will see an increase in taxes is on the services related to selling your home. Currently you are required to pay the 5% GST on real estate commissions, legal fees, home inspector, moving costs....ect. As of July 1st you will pay the 13% HST on these same fees. On an average resale house or condominium priced at $350,000- this will amount to an additional $1500 to $2000. For Condominium owners, HST will also apply to condo fees.
HST Impact on New Homes
The biggest impact of the HST will be on new home purchases over $400,000. Before July 1st 2010, all new homes were subject to the GST. Under the new HST, new home buyers will pay a tax of 13% instead of the 5% GST. However, the government has provided a rebate up to $400,000 which essentailly takes the PST portion off a home priced under $400,000.
Disclaimer- This article is a response to the not so effective job that the media and government has done so far in explaining the impact of HST on the real estate market. This article should not be taken as expert tax or legal advice and you are advised to seek the advice of an accountant or lawyer if you are unsure of anything. For more information on HST go to the Province of Ontario web site.