New HST does not apply to purchase price of Re-sale homes.

On July 1st, 2010 new HST (Harmonized Sales Tax) came into effect. What that mean is that Government of Ontario has merged 8 % Provincial Sales Tax with 5 % GST (Federal Goods and Services Tax) making it one 13% HST. Which has resulted in many goods and services which only had federal tax before will now have two taxes in the form of HST?

A lot of Ontario residents think that new 13 % HST will apply to the purchase price of re-sale homes. As a matter of fact as per OREA (Ontario Real Estate Association) Survey 56% people mistakenly believe that way. Yes it is a mistaken belief. In reality, HST (Harmonized Sales Tax) does not apply to the purchase price of a re-sale home. It applies to various transaction fees when a pre-owned home is purchased. For example it applies to,
• Legal Fees
• Home Inspection
• Real Estate Commissions
• Moving Costs
• Appraisal Fees
• Renovations etc.

To understand better let us take an example of a re-sale home which has purchase price of $350,000. Now, according to what most people think if it was applied to purchase price the tax would have been $45,500. Wow – Thanks God it is not applied to purchase price. According to rough estimate the average buyer will pay anywhere $1000 to $1500 more in transaction costs because of HST.

New homes purchased from builder which use to have GST on it now will have HST. But government offers up to $24000 of rebate regardless of price. Which means if you are buying a new house of $400,000 or less, you will get up to 75 % rebate making it same as before or possibly even less than what it use to be prior to July 1st 2010.

Hope fully these information help clearing out confusion about HST. People who are holding themselves from buying their dream home or still have questions do not hesitate to contact me I will help you out with all your questions so you can make informed wise decision.