Markham Boxgrove Homes, Morningside Heights Homes, Scarborough Town Centre Condos Real Estate: http://www.JasJagpal.com
Just the other day Tony called and had a few questions on HST. You see his Mom is looking to sell their house and they were terrified at the prospect of having to pay 13% HST on the sale of their house. I'd be petrified as well. Imagine paying 13% tax on a house worth $400,000, yeah that is $52,000 big ones!
I assumed with all the talk about HST in the media and having written a few blogs on it that people understood the basic rules but I think it would be a great idea to refresh everyone how the HST affects you when buying or selling real estate.
1. If you are buying or selling a house that was built and occupied before July 1st, 2010 then you do NOT pay HST when you sell it. This is called the RESALE market. In other words, you are reselling a house you previously purchased. The majority of the real estate transactions come from resale market so most people won't be affected detrimentally by the HST.
2. If you buy NEW from a builder, be it Condo, Townhouse, Semi, Detached, etc. you will be paying HST. Yeah that Sucks! To make it suck less... the government decided to provide a 75% rebate on the first $400,000 (average price in Toronto). So instead of paying $52,000 in taxes on a $400,000 new residence you pay $13,000.
Obviously if the new house is worth $500,000 you will pay $13K on the first $400,000 and another $13K for the next $100,000 for a total of $26K in HST tax. Most builders will incorporate the HST tax in their selling price to keep advertising simple and consistent and so they do not alarm Buyers who are looking to buy new. I'm sure many Buyers would walk away from the builders if they were asked to pay an additional $26K plus for HST on the advertised price.
3. Lastly,
HST is charged on all services that occur in a real estate transaction. So on an average priced home you will pay around $2000 in HST tax. This covers tax on Realtor commissions, Lawyer Fees, Bank Appraisals, Inspections, Movers, Closing adjustments, etc.
In a NUTSHELL ... HST is definately an added cost to the real estate transaction in Ontario. For most resale homes you can think of it as a cost of home ownership and a cash grab by the government, just like the Toronto Land Transfer Tax. However, if you want the bells and whistles of buying new and living large you won't mind paying for it.
© 2010- Jas Jagpal
Jas Jagpal, Remax Sales Representative, jasjagpal@gmail.com ; 647-272-6629
Markham Boxgrove Homes, Morningside Heights Homes, Scarborough Town Centre Condos, Toronto Real Estate: www.JasJagpal.com
Posted on: www.1stoprealestate.ca : www.LinkToMorningside.com: www.MarkhamBoxgrove.com
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Just the other day Tony called and had a few questions on HST. You see his Mom is looking to sell their house and they were terrified at the prospect of having to pay 13% HST on the sale of their house. I'd be petrified as well. Imagine paying 13% tax on a house worth $400,000, yeah that is $52,000 big ones!
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