There seems to be some confusion on how HST will effect home owners when they sell their house or purchase a resale home.
HST is only charged on the real estate commission, not the selling price of your home. For example if you sell your home and the real estate commission charged was $10,000, you will have to pay $1300($10,000x .13%) on top of the $10,000 for a total of $11,300. Prior to July 01/10, sellers only paid GST which was 5% or in the above example would be $500 or $10,500.
Sellers for ordinary family residences do not pay HST on the selling price only on the commission.
Buying and selling real estate will not escape this onslaught. Even though, there is no HST payable on the purchase or sale of a resale home, many services associated with the buying and selling will now attract increased taxation. Example of the increased costs is as follows:
- Real Estate fees /commissions
- Moving costs,Legal Fees
- Home Inspection costs
- Mortgage Insurance premiums
- Condo Management fees
- Concierge services
- Utilites
The condominiums fees are exempt from the HST, though they will also go up as many of the components that make the maintenance fee, will attract HST. The residential rents are exempt from HST but the renters will not escape HST altogether. As the costs of the landlords will go up, they are likely to pass these costs to the consumers. It is estimated that rents will go up by 2.5% to 3% because of the new HST.
The commercial rents will be subject to HST, but these taxes will be treated as flow through input credits. There is a complex formula for HST on new homes. Homes under $400,000 are exempt from the additional tax. On new homes priced up to $400,000, there will be rebate of up to $24,000, which is equivalent to the 75% of the 8%, of the provincial portion of the tax. This rebate in almost all cases will be assigned to the builder and is built in the price of the property.
A resale property that has been 90% renovated will be treated as a new home and will be subject to HST. Farm land will also be subject to HST, if it is sold alone, however, it may be treated differently if it is sold as a part of the farming business
Just another reason to use CAN SAVE for your next real estate transaction, not only will you pay less commission on your sale but you will also pay less HST. Call Paul at 905-430-3000 if you have any questions or visit www.housefitters.ca