We wanted to clear up all the confusion surrounding the latest tax (The Harmonized Sales Tax (HST)) to be forced upon the residents of Ontario. Here are a few bullet points for clarification:
■The HST is currently not in effect- The effective date is July 11, 2010
■The HST will be 13% (based on the 8% Provincial Sales Tax and the 5% – Goods & Services Tax)
■The HST will NOT APPLY on the purchase of re-sale homes
■The HST after July 1st, 2010 will apply to the services associated with the purchase of re-sale homes such as real estate commissions, legal fees, moving costs, etc.
How it will impact New Homes:
■New home purchases across all price ranges would receive a 75% rebate of the provincial portion of the single sales tax on the first $400,000.
■New home purchases under $400,000 would not pay any HST.
■Contracts entered into before June 18, 2009, regardless of possession date, would not be subject to HST
The HST is currently being challenged by the Canadian Real Estate Association (CREA) and the Ontario Real Estate Association (OREA). There is some speculation that the existing hot real estate market in in the GTA is being partially influenced by this proposed tax, similar to the market rush driven by Toronto's new Land Transfer Tax as of January 2009.