Why HST Shouldn’t Scare You Off Buying
August 27, 2010 § Leave a comment
Have you heard the nickname for the HST Tax? It’s known amongst Ontarians as the “Tax on Everything”. Unfortunately for us, that’s fairly accurate. As far as the housing market goes, however – it’s not entirely true.
The HST applies differently depending on the type of real estate, whether it’s resale housing, newly constructed housing, or business properties.
We know there is the on-going cost of property taxes, and the upfront cost of land transfer tax that apply to a home purchase. The most important thing to know about the HST is that it will not increase the tax load on the purchase price for homebuyers who purchase resale housing. This is because resale housing has never been subject to PST or GST, so it will continue to be exempt from both.
The same is not true for newly constructed homes, which will be hit with additional tax under the HST. Newly constructed housing has always been subject to the GST, meaning thousands of dollars of tax for home buyers choosing this option. Now, with the HST, new housing will also be subject to PST, meaning even more hard earned dollars in added costs for home buyers of new housing.
On the bright side, the provincial government provides a rebate of 75% of the PST on the first $400,000 of a newly constructed home, or a maximum of $24,000. Fortunately, home buyers choosing to purchase a resale home don’t have to worry about paying HST on the price of their home.
We hope this has clarified things for you, and that you won’t shy away from the thought of buying a great investment property or home.