Ontario Sales Tax Harmonization Will Hurt Resale and New Home Market

Real Estate Sales Representative with RE/MAX of Wasaga Beach Inc., Brokerage

The long arm of the Ontario government taxman is desperately trying to reach even deeper into consumers' pockets, this time with his eye squarely on home buyers in this province. I just received the following press release from our local board. Please read on:

    (Toronto, March 26, 2009) Ontario’s REALTORS® say the McGuinty government's plan to harmonize the GST and PST will add over $2,000 to the cost of a real estate transaction, hurting the resale home market and prolonging the housing industry’s recovery from the current economic downturn.

“Now is not the time to be erecting barriers to homeownership,” said Pauline Aunger, President of the Ontario Real Estate Association (OREA). “We need consumers to invest in housing to help get our economy going again.”

According to the Canadian Real Estate Association (CREA), home sales in the province of Ontario were down 29 per cent in February, compared to 2008.

Under a harmonized sales tax (HST), home buyers and sellers will have to pay extra tax on a range of services associated with real estate transactions such as legal fees, moving costs, real estate commissions and home inspection fees. Currently, consumers only pay the 5% Goods and Services Tax (GST) on these services.

“These additional taxes could price some homebuyers, especially first-time homebuyers, right out of the market,” explained Mrs. Aunger. “Harmonizing will not help homebuyers in any way. I urge the Government of Ontario to avoid sales tax harmonization and work with REALTORS® to promote homeownership as a safe and secure investment.”

For a resale house priced at $360,000, a HST could add over $2,000 in new taxes to closing costs. In total, a HST will add $313 million annually in new taxes to resale home transactions.

“In the last decade, Ontario’s homeowners have faced a barrage of new costs,” said Aunger. “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.”

With respect to new housing, a study conducted by the world’s largest real estate advisory group, Altus Clayton, indicated that a new HST would cause tax increases for new single detached homes ranging from $8,957 (Windsor) to $17,049 (Ottawa) outside the Greater Toronto Area (GTA), and from $24,566 (Mississauga) to a whopping $46,676 (Toronto) within the GTA. According to the Building Industry Development Association (BILD), a HST on new homes would cost Ontario home buyers $2.4 billion annually. Altogether, a HST on new and resale homes could cost consumers $2.7 billion annually in new taxes.

OREA urges the Government of Ontario to avoid harmonizing the PST with the federal GST. Such an alteration to Ontario’s tax policy would costs consumers, particularly homebuyers, millions, ensuring that housing sector’s recovery from this economic downturn is unnecessary prolonged. REALTORS® are eager to work with the Government of Ontario to keep the costs associated with homeownership at affordable levels, encouraging homeownership as a safe and secure investment.

Ontario’s real estate industry is essential to the provincial economy. 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. The Ontario Real Estate Association represents 47,000 brokers and salespeople who are members of the 42 real estate boards throughout the province. 



Table 1: HST and Resale Homes

Taxable Service

Current Tax Payable

New Taxes

HST Tax Payable

Mortgage Insurance Premiums




Legal Costs




Real Estate Fee/Commission



$1,872.00 - $2,808.00

Home Inspection




Title Insurance




Total New Tax:

$1,749.25 - $2,325.25


 Contact: Jim Flood Director of Government Relations, Ontario Real Estate Association (OREA) 416-442-3408

1 CMHC premium of 2.75% for mortgage with a 5% down payment on a $300,000+ home.

2 Consumers currently pay the 8% PST on mortgage insurance premiums.

3 Real estate commissions are negotiable or may be a flat fee. Estimated range of 4% to 6% used.

4 Ministry of Finance, Public Accounts, 2007/2008.

5 Altus Group, “Economic Impact of MLS® Home Sales,” June 12, 2007.



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