HST and Real Estate
Like the GST, the HST is a value added tax which means the consumers bears the majority of the brunt of its impact. The speaker the other day said that generally, in a real estate transaction of a resale property, there will be about $ 1500.00 in extra tax to be paid. It doesn’t seem that obvious because different costs are the responsibility of different parties, and sprinkled over different service costs.
The services that are subject to HST are the following
Legal fees (buyers and sellers)
High ratio insurance premiums (buyers)
Moving costs (buyers and sellers)
Real estate commission (sellers)
Fire insurance premiums (buyers)
Appraisal fees (buyers)
Title Insurance (buyers)
Chattels (IE appliances) (buyers)
Home inspection fees (buyers)
Resale homes and residential income properties are not subject to the tax but commercial properties and new home sales are subject to the tax.
As before, it seems that builders will continue to include the HST in the sale price and have buyers sign the rebate back to the builder on closing. However, the rebates drop off starting at $ 350,000 and are maxed out at a $ 400,000 sale price. It appears that builders are now saying that the buyer will have to pay the HST on any house with a sale price over $ 400,000. This will hugely affect the price on houses over $ 400,000.
There is a transitional period on new home sales for properties where the agreement was done before July 1st but the closing was after July 1st. On resale properties, if there is an accepted and acknowledge agreement by or prior to 30 Jun you will only pay GST on the commissions due. Accepted offers 1 July and onwards will include the additional 8% included in HST. In the end, it is best that you talk to your real estate professional, builder, or accountant before moving ahead to make sure you understand all the complexities.