Don Travers

The Harmonized Sales Tax (HST) comes into force on July 1, 2010. The Real Estate Industry is the hardest hit of any industry in the province. Real Estate commissions and legal fees that were previously exempt from Provincial Sales Tax (8%) will be subject to the HST (13%), adding approximately $1,500 to the cost of the average sale transaction.

The HST will not apply to the cost of a resale home; but all new homes will be subject to HST. There is a 6% rebate on new homes with a purchase price up to $400,000, after that there will be an additional 8% charged. Homes with a purchase price over $400,000 will still get the initial rebate of up to $24,000 together with the old GST rebate of $6,230. In order to qualify for the new HST rebates, the Purchaser must occupy the property as their primary residence.

Investors will be hard hit because there will be no HST rebate at time of sale. There is an investor rebate, but the investor will have to claim that rebate after owning the property for a period of one year. Commercial properties will not be affected by the HST if both Purchaser and Seller are HST registrants. In that case the Purchaser will self assess the tax then claim the HST input tax credit, washing out the payment of Tax.

If you have any questions or need more information please contact Don Travers, Real Estate Lawyer, with Paquette Travers & Deutschmann by phone: 519-823-9832 or by email: don@paquettetravers.com.