A group of us from the office recently attended a seminar on the Harmonized Sales Tax and how it will affect the real estate transaction. I thought I would pull out the main key points and post them here. In some ways it is confusing, and in others, it is not.
Like the GST, the HST is a value added tax which means the consumers bears the majority of the brunt of its impact. The speaker the other day said that generally, in a real estate transaction, there will be about $ 1500.00 in extra tax to be paid. It doesn't seem that obvious because different costs are the responsibilty of different parties, and sprinkled over different service costs.
The services that are subject to HST are the following:
* Legal fees (buyers and sellers)
* Real estate commission (sellers)
* Chattels (IE appliances) (buyers)
* High ratio insurance premiums (buyers)
* Fire insurance premiums (buyers)
* Home inspection fees (buyers)
* Moving costs (buyers and sellers)
* Appraisal fees (buyers)
* Surveys (buyers)
* Title Insurance (buyers)
Resale homes and residential income properties are not subject to the tax but commercial properties and new home sales are subject to the tax.
As before, it seems that builders will continue to include the HST in the sale price and have buyers sign the rebate back to the builder on closing. However, the rebates drop off starting at $ 350,000 and are maxed out at a $ 400,000 sale price. It appears that builders are now saying that the buyer will have to pay the HST on any house with a sale price over $ 400,000. This will hugely affect the price on houses over $ 400,000.
There is a transitional period on new home sales for properties where the agreement was done before July 1st but the closing was after July 1st.
In the end, it is best that you talk to your real estate professional, builder, or accountant before moving ahead to make sure you understand all the complexities.
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