Ontario’s New Harmonized Sales Tax To Impact Real Estate

As we’ve talked about here before, the real estate industry is a major driver in the Canadian economy.  For example, in 2008, real estate in Ontario accounted for $56.6 billion in sales, $6.01 billion in ancillary 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.

With yesterdays budget, 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.  I’m not sure it will really be a harmonious transition.

Currently, certain services associated with a real estate transaction only attract GST and not PST.  What that means is that consumers will be forced to pay 8% more for things like legal fees, home inspection fees, mortgage insurance premiums, moving costs and yes, real estate commissions.

According to a media release issued yesterday by the Ontario Real Estate Association, the HST could add over $2,000 in new taxes to closing costs.  They also say that overall, it will add $313 million annually in new taxes to resale home transactions. Here is a chart showing the breakdown of those numbers:

hst-chart1
Pauline Aunger, President of the Ontario Real Estate Association said, “In the last decade, Ontario’s homeowners have faced a barrage of new cost. From municipal land transfer taxes to sky rocketing property taxes, homeowners are being pushed to the brink to accommodate increasing demands from government. A harmonized sales tax is yet another cash grab on Ontario’s already overtaxed homeowners.”

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.

It’s worth noting that Quebec, New Brunswick, Nova Scotia and Newfoundland and Labrador have already harmonized their sales taxes with the GST.

Sigh.  Will there be consumer backlash in Ontario?  Time will tell.


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About Marg

is an award-winning real estate Broker who has successfully been helping people move since 1989. When it’s time for a move in or out of a bigger, smaller, better, more expensive, less expensive, newer, older, house, condo, farm, investment property, vacant lot or business, talk to Marg.

This entry was posted by Marg on Friday, March 27th, 2009 at 7:56 am and is filed under Buying Real Estate, Money Matters, Selling Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

4 Comments

  1. Lady Samm says:

    Good Morning Marg,

    Wow, I am telling you, if we had not sold when we did..* had to pay land transfer taxes and were not happy about that…We would certainly not be selling today…

    I cannot for the life of me see us ever leaving this home. Now that we have it exactly the way we like it, there is no looking back and with our present gov’t tactics, I cannot see many doing so unless they have no other choice…Goodness, I am tired of all of our taxes, no wonder our country is in the position it is…who do we have to look up to for a brighter future…

    Now can I pour us both a very strong coffee> lol

    cause you matter
    ladysamm

  2. […] Ontario’s New Harmonized Sales Tax To Impact Real Estate …What that means is that consumers will be forced to pay 8% more for things like legal fees, home inspection fees, mortgage insurance premiums, moving costs and yes, real estate commissions. According to a media release issued yesterday …  read more… […]

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