HST affects homeownership | #Toronto #realestate

HST affects homeownership

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As of July 1, Ontarians have been paying a harmonized sales tax rate of 13 per cent on a long list of goods and services that were previously exempt from the eight per cent provincial sales tax. While the impact of the tax is being felt by all Ontarians, the province’s three million homeowners and the thousands who buy and sell a home every year have also been affected.

As real estate professionals, realtors know how important the dream of homeownership is to Ontario families. After July 1, every residential real estate transaction in Ontario faced a tax increase, specifically legal fees, appraisals, real estate commissions, condo fees, home inspection fees and moving costs.

As HST applies to most of the services provided in completing the real estate transaction, 13 per cent HST is applied to the commission a realtor charges for facilitating a sale. The tax is paid by the person responsible for paying the commission — generally the seller. HST is charged on these fees regardless of whether the house purchase is itself HST exempt — one exception is mortgage broker fees are HST exempt if the fees are charged separately from any taxable real estate commissions. As well, mortgages and interest on mortgages are HST exempt.

Resale homes are sold without HST. This is because resale housing was never subject to provincial sales tax or the federal goods and services tax, and has continued to be exempt from both taxes now that they are combined under the HST. Revenue Canada defines “used residential property” to include a previously occupied house, condominium, summer cottage, vacation property or non-commercial hobby farm. New home purchases are subject to HST but may qualify for an HST rebate. Ask your realtor for details on rebates based on the purchase price of the home you are considering.

Land may be exempt from tax, but realtors and other professionals must charge HST on the purchase price. However, if the home is going to be your primary place of residence, it may qualify for a partial HST rebate, depending on sale price.

HST is normally payable when the real estate transaction is completed — generally the “closing date.”

In some cases, HST could be payable on transfer of possession.

When it comes to HST for businesses, although the costs of purchasing or renting a commercial property are subject to HST, businesses are allowed to claim tax credits to offset these costs.

Even better, when purchasing a commercial property, the business can claim the tax credits immediately so no upfront costs are incurred for the HST, and cash flow is not affected.

Remember, your realtor is there to answer any questions you have about HST and your real estate transaction. You can also find further information pertaining to the HST at www.windsorrealestate.com or www.rev.gov-.on.ca.

 

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About Tariq Sultan
Dear Readers, I am a dedicated Toronto, Ontario based real estate professional who has been successfully meeting and exceeding the needs of his clients for past several years. I am actively involved in the insurance, financing, and mortgage industry. Real estate is not only my career – it is my passion. I strive to continuously provide my clients with exceptional service to ensure they are fully satisfied when it comes to their real estate needs. For any real estate related inquires contact me today, I will be happy to assist you. Best wishes, Tariq Sultan

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