HST a Looming Threat for Ontario Home Buyers
The harmonized sales tax introduced by the Liberal Government in Ontario will be put into effect in July 2010. Many home builders and Realtors believe this will have a deflating effect on Ontario real estate after July 1st. The HST will apply to new homes and to all home closing costs thus adding to the cost of buying a home in Ontario. Under the HST, new homes sold at less than $400,000 will qualify for a 6% tax rebate. New homes however, priced at more than $500,000 will be subject to an additional 8% tax. That adds an extra 30,000 dollars to the price of a luxury home. In Mississauga, most luxury condos and homes are priced above $500,000. In Toronto, prices are much higher and the HST is expected to have a degrading effect on sales when it kicks in.
Tax on Resale Homes
OREA estimates the HST will add $1,449 in new taxes to an average resale home costing $302,354. And, OREA claims the HST will add an estimated $262 million in new taxes annually to residential resale real estate transactions.
For those struggling to gather enough for a down payment, the extra thousands of dollars in tax may prevent them from actually buying a home. One of the reasons the Ontario real estate market is heating up, besides the great November weather, is the fear of having to pay $30,000 to $60,000 more for a house beginning in July. Real Estate commissions will also now be subject to the HST.
HST New Home Rebate
The Federal government offers a GST/HST New Housing Rebate program which provides a rebate on part of the GST or the federal part of the HST paid on the construction or purchase of most newly constructed or substantially renovated houses used as a primary place of residence. You can get the HST Rebate application here.
Buying Older Homes
Older homes are not exempt from the HST. If you're considering buying an older home, you should know about the Ontario Home Energy Savings Program and Home Energy Retrofit Program which offers rebates for certain home improvements.
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