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How will HST affect Toronto home purchase costs?

By Anne Lok

Real Estate Sales Representative with Berkshire Hathaway HomeServices Toronto Realty

May 14, 2010 03:10 AM

In Ontario, the 13% HST comes into effect on July 1, 2010. [The government would like to word it as the "more modern, and value-added tax that will be combined with the current GST.] Only 17% of products will see the new tax. The new tax will affect personal and professional services such as:

electricity and heating [natural gas and oil for the home]
internet access service
Home Service Calls by Electrician/Plumber/Carpenter to Maintain or Repair Furnace, Leaky Faucets, Bathtub, Toilet, Electrical Wiring, etc.
Landscaping, Lawn-Care and Private Snow Removal
Magazines Purchased by Subscription
Home Renovations
legal and accounting fees

For real estate transactions:

New homes over $400,000. [However, new homes purchased as primary residences, valued at $400,000 or more will be eligible for the maximum new housing rebate of $24,000.]
Real estate commissions [the current 5% GST will change to 13% HST]
Residential condo fees charged to residents are exempt; however, purchases by condominium corporations will be subject to HST, if applicable.
No change to Residential rents. Commercial property rentals will be subject to HST.
No change to mortgage interest cost.

You can learn more about the upcoming changes at the Ministry of Revenue website http://www.rev.gov.on.ca/en/taxchange/taxable.html or call 1 800 337-7222 and 1 800 959-5525 [CRA]

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Gisele Caron-Zoratto

RE/Max Premier Inc. - Vaughan, ON

That's all very nice....we can just look up the new rules on the net...how do you think it will affect your business..,.if it hasn't already?

I have noticed a slow-down all across due to the anticipation of the new HST and the scare it has has on many hesitant buyers....

Jun 29, 2010 04:15 PM

Anne Lok

Berkshire Hathaway HomeServices Toronto Realty - Toronto, ON

Toronto Modern Real Estate

Hi Gisele,

I work primarily in Central Toronto. There has been a frenzy of people selling and buying in the past 3 months. However, most clients I have spoken to are not clear on how it will increase individual household spending. For real estate, it impacts sellers significantly more than buyers due to commission paid out. The buyers are still buying. With more inventory on the market the last few months, the market has been more balanced. The new tax doesn't seem to have affected pre-construction sales downtown. Purchasers are still lining up to buy with the good developments selling out fast. A good portion of the buyers are investors, first time buyers and immigrants. It hasn't affected my business that much [so far]. We will be more clear in the next quarter. I think rise in interest rate will have a bigger effect on the real estate market in the near future, than HST which will eventually be absorbed.

Roughly 260,000 immigrants come to Canada every year, with a 1/3 choosing to live in GTA. These people all need a roof over their heads. The recent change in immigration law will further promote the arrival of wealthy entrepreneurs who would park their money in real estate, mainly China and Taiwan who can show a net worth of at least $500,000 to invest.

Jun 30, 2010 01:48 AM

How will HST affect Toronto home purchase costs?

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