Real Estate: My New Job as a Tax Collector

Real Estate Agent with Sotheby's International Realty - Canada

istock_000003021007xsmallIn yesterday's Ontario Budget, the Liberal Government, in a effort to help the business community has heaped more taxes on Homeowners. After last year's City of Toronto Land Transfer Tax(doubling the existing Tax but only in the 416 Region), there will now be further new taxes when you buy and sell homes.

Previously, services such as Lawyer's fees, Home Inspection and Realtor's Commission were only subject to the Federal GST but now the Province in "Harmonizing" taxes has decided that these fees should also be subject to the Provincial 8% as well making the new HST, as it is called, 13% by the beginning of 2010. The Province may call it Harmonizing but it looks more like another tax increase to me, especially when by adding taxes to services that were never taxed before and lessening the administration of these taxes, there is no counter balance being offered in dropping the new HST to a lower than 13% rate.

It is the REALTOR that has to remit the GST and it is the REALTOR that will now have to remit the HST.  At present, my assistant works hours each week dealing with my GST as there are rebates available for all the goods and services that I already pay GST on. We will deal with this as we will also have to deal with the Provinces new plan to make Energy Audits part of the Agreement of Purchase and Sale but I have some problems with the Government's handling of all this in a DEMOCRACY:

1) Have there been assessments of the impact of Businesses that are newly subject to the HST? If so, where is the transparency to release these studies to the consumer...

2) If the Ontario Government is giving household's making under $160,000 a year a first year series of cheques amounting to $1,000 per household, then is the assumption that these new taxes will amount to increases of $1,000 per year? If that is the case, what happens in the second year and is that $1,000 taxable?

3) What happens to residents in the core of the City where the average sale price means that very few properties would be exempt under the $400,000 exemption? These are the same tax payers who are still smarting from the Miller Land Transfer Tax that was permitted by the Provincial Government and has had a further chilling effect on the Real Estate Market in the City of Toronto. New Homes over the exemption price will now be liable for a %13 tax and increase of 8% over the existing 5%. That should really dampen the building of new larger condominiums and homes....buying new construction of $1,000,000 will mean a tax of $130,000 before the Land Transfer Tax and other any other services...

4) Why was this new stealth tax brought forward so quickly in Ontario and without public consultation? What has been learned from the experience of other Provinces who have move to an HST?

5) Does the Province not know that the sale of a house usually puts at least $33,000 into the economy in terms of renovations, painting, purchase of appliances? Is the timing right for this kind of hit?

If I appear somewhat shell-shocked it is because with everything I read about the Harmonized Sales Tax, I find more and more to question and wonder where the Public discussion has been. I am a big believer in transparency and discourse in any major change that Government proposes and wonder why there seems to have been so little of it in the case of the HST...

Please feel free to add your thoughts and get the discussion going below and check out the article in Today's Globe and Mail, the press release from BILD (the Toronto Home Builder's Association) and the press release from the Ontario Real Estate Association.

Reposted from: Real Estate: My New Job as a Tax Collector


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Richard Silver

Sales Representative, ABR, e-PRO, CIPS
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