HST - Ontario’s New Harmonized Sales Tax To Impact Real Estate
The real estate industry is a major driver in the Canadian economy. In 2008, Real Estate in Ontario accounted for $56.6 billion in sales, $6.01 billion in economic spending and $1.35 billion in land transfer tax revenue to the provincial government. In addition, real estate employs 110,000 Ontarians directly and indirectly.
The Ontario government announced the anticipated new HST blending of PST and GST effective July 1st, 2010 creating a new combined tax rate of 13% on the purchase of almost all goods and services in Ontario.
Currently, certain services associated with a real estate transaction only attract GST and not PST. What that means is that consumers must pay 8% more for legal fees, home inspection fees, mortgage insurance premiums, moving costs and real estate commissions. The HST could add over $2,000 in new taxes to closing costs.
One exemption is that the full HST will not apply to new home purchases with a value of under $400,000. Those sales will still attract the existing GST.
If you are considering a Real Estate transaction in 2010, you may be able to avoid this additional tax by conducting your real estate business prior to July 1st. |