HST Confusion…and Clarification

HST Confusion…and Clarification

When exactly does HST come into effect for real estate transactions?

That’s the problem. This is not exact science.

To clarify…

For Resale Homes

As of July 1st, buyers and sellers will pay 8 per cent more on legal fees, appraisals, real estate commissions, home inspection fees, and moving costs.

That’s about $2,500 extra if you are selling a $600,000 home. And just over $4,000 on a $1 million dollar home.

Someone once told me not to take any money for granted, and a good way to look at things was by figuring out how much careless use of money was costing you in terms of wine.

THAT’s a lot of wine folks.

And the government will still keep cutting…The HST will also apply to utility bills, such as gas, electricity and home heating fuel, on home renovation labour, the cost of lawn upkeep or landscaping and the cost of snow removal, which were all previously exempt from PST.

For New Homes

Before, new homes were exempt from PST. As of July 1st, new homes worth less than $400,000 will qualify for a 6% tax rebate, but new homes worth more than $500,000 will be subject to an additional 8% tax. Ouch. That’s $40,000. Way to go Ontario for effectively squashing new home sales and development.

But wait! There’s still time!

For those of you trying to take advantage of the 42 days or so before it applies, you have a bit more time on your side.

As per our broker, “If 90% or more of the services are performed before July 1st, HST will NOT apply. Most transactions written and firm before July 1st, 2010 can be assumed to be HST free.”

Meaning, if you have a firm sale or purchase before July 1st, but the close date falls after July 1st, you can assume you will be HST free.

So if you are currently in the market to sell or buy, make sure you not only have an accepted offer, but make sure any conditions are removed prior to June 30th!!

I, for one will be planning not to sleep for the last week of June.

Cheers,
Mark

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1 Comment
  • grahame

    Just wanted to make everyone aware of some of the personal tax cuts that are part of the HST tax package.

    The HST is part of this comprehensive tax package that will see 93 per cent of Ontarians receive personal income tax cut. With these cuts Ontario now has the lowest provincial tax rate in Canada on the first $37,106 of taxable income. In fact, 90,000 low-income Ontarians will no longer have to pay Personal Income Tax.

    To help families we have introduced a permanent $260 Sales Tax Credit for low- and middle-income adults, children and seniors. In total $4.2 billion in transition payments will be delivered to help Ontarians adjust to the Harmonized Sales Tax. It is important to remember that every $100 in tax relief is equivalent to the 8% tax on $1250 in newly taxed items.

    Ontario is exempting children’s clothing and footwear, infant and child care seats, diapers, books, food under $4, newspapers, and feminine hygiene products, from the provincial portion of the HST.

    July 21, 2010 at 3:41 pm