Harmonized Sales Tax:
Implication for Owning Real Estate in Ontario
Resource:
Ontario Real Estate Association Political Affairs Conference
What Is Happening:
HST will replace the 5% GST and the 8% Retail Sales Tax
HST will apply at a 13%rate effective July 1, 2010.
Harmonized Sales Tax (HST) – A Bit of History …
January 1991 – Federal Government introduces GST at 7% replacing the Federal Manufacturer’s Sales Tax
April, 1997 – Three Atlantic Provinces eliminate sales taxes and replaces GST with 15% HST
Then .. More Changes
July 1, 2006 GST rate was reduced from 7% to 6%. The HST was reduced from 15% to 14%.
January 1, 2008 the GST rate was reduced from 6% to 5% and the HST rate was reduced from 14% to 13%
The Future – On July 1, 2010 Ontario will eliminate the 8% retail sales tax and replae the GST with a 13% Harmonized Sales Tax (HST).
On July 1, 2010 British Columbia will eliminate the 7% sales tax and replace the GST with a 12% Harmonized Sales Tax (HST).
HST by Province on July 1, 2010
Alberta 5% GST
British Columbia 12% GST
Manitoba 5% GST + 7% Sales Tax
New Brunswick 13% HST
North West Territories 5% GST
Nova Scotia 13% HST
Nunavut 5% GST
Ontario 13% HST
Quebec 5% GST + 7.5% QST
Saskatchewan 5% GST + 5% Sales Tax
Yukon 5% GST
GST vs. HST – What’s The Difference?
There is not much difference, other than:
- HST applies at a (much) higher rate
- Extra tax revenues to the Province
Implications for Buying Used Homes
Many previously tax-free services will be HST taxable, including:
- home inspection fees
- real estate commissions
- legal fees
- home appraisals
- moving costs
- mandatory home energy audits
OREA estimates HST will add $1,449.00 in tax to acquiring an existing home.
Implications for Maintaining Homes
Many previously tax-free services for maintaining a home will be HST taxable:
- utilities
- home renovation labour
- lawn upkeep or landscaping
- snow removal
OREA estimates HST will add $480 in annual tax (budgeting $500 per month for such costs).
Implications for (Expensive) New Homes
GST/HST applies on the first sale of a new home
HST rebate intended to limit additional HST cost to Retail Sales Tax equivalent, estimated at 2%
But, full 8% Provincial component of HST applies to new homes above $400,000, which is an additional $24,000 for an $800,000 home.
Gloria Valvasori
Sales Representative with Signature Service GMAC Real Estate
gloriavalvasori.com
