The HST and Real Estate

It's been more than a year since Ontario adopted the HST and I still get questions about how the HST applies to real estate sales.  As a little refresher I thought I would update an old post from one of my blogs back in 2010.

First, let me say that house prices have not increased by 13% as a result of the new HST.Residential resales were exempt. So unless there is a commercial component to the property in question you don't have to worry, but check with your Realtor or Accountant about the property in question because there are a few areas that are a little tricky.

We held a seminar at the Petawawa Public Library last year to educate consumers on how the introduction of the HST tax system would affect their next real estate transaction. After speaking with a few people who came out to learn all about the changes, which come into effect on July 1st, 2010, I soon realized that there were quite a few misconceptions on the topic. Here are a few points we covered in our seminar:

Ontario HST Explained

Buyers

• Services for Lawyers - Previously 5% GST will increase to 13% HST
• Services for Home Inspectors - Previously 5% GST will increase to 13% HST
• The HST will apply to the purchase of new homes. Purchasers will be allowed to claim a rebate on a portion of the provincial the tax for new homes priced up to $500,000. For homes purchased as primary residences under $400,000 the rebate will be six percent of the purchase price (or 75 percent of the provincial portion of the tax)

Sellers

• Real Estate Commissions - Previously 5% GST will increase to 13% HST
• Services for Lawyers - Same as for buyers, now 13%

Obviously, this isn't a comprehensive list, but it should give you an idea about the kinds of things that are affected. I hope you found it helpful but feel free to contact me directly if you have any specific questions.