Just as real estate market is begining to recover, Realtors and home builders are worried about Ontario's new harmonized sales tax(HST). Under current laws, new homes are exempt from PST. Under the new HST, new homes worth less than $400,000 will qualify for a 75% tax rebate, but new homes worth more than $500,000 will be subject to full HST (5%GST+ 8%PST = 13%HST). This would mean an additional $30,000 on a $500,000 home. At present, the price of a $500,000 house includes about $10,000 in provincial sales tax on items such as lumber and bricks.

In 2008, real estate in Ontario accounted for $56.6 billion in sales, over $6 billion in economic spending, and $1.35 billion in land transfer tax revenue to the provincial government. In addition, the real estate industry employs 110,000 Ontarians directly or indirectly.

Beginning July 2010, the HST will be applied on all new homes. Housing costing less than $500,000 will be eligible for as much as six percentage point tax rebate, but anything priced above that gets the full 13% tax.

If you live in British Columbia you avoid the PST, at least for now.