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THE ONTARIO HARMONIZED SALES TAX || is proposed to combine the already existing 8% Ontario Sales Tax and the 5% GST into a single 14% value-added sales tax that would be federally administered beginning July 1, 2010.

·         Purchasers of newly constructed homes under $400,000 would not be subject to an additional tax burden.

·         Buyers of new homes valued between $400,000 and $500,000 could claim a proportional rebate.

·         New rental housing rebate, similar to the enhanced new housing rebate, for new residential renal properties.

·         Up to $400 million in one-time sales tax credits would be provided to help small businesses make changes to point-of-sale and accounting systems.

·         Provincial portion of the tax rate on transient accommodation, such as hotel rooms, would rise from 5% to 8%. Approximately $40 million a year would be allocated to support destination marketing in Ontario tourism regions once these are established.

How will this new HST affect Housing in Ontario? || The Provincial government is proposing to harmonize the GST with the PST. This new tax will be known as the HST. The underlying principle is to increase efficiencies by having just a single tax. However, some goods (i.e. Housing) that have never been subject to the PST, suddenly would be. This could cause a large dilemma for new home buyers.

This has tons of people inside and outside of the Real Estate industry very concerned. The cost of a new condo or a new home in the GTS could jump overnight by tens of thousands of dollars for new purchasers if this new tax was to be implemented with no concessions.  (Resale properties are not subject to the GST or PST – this only applies to new purchase).

The province just announced that there will be some new proposed changes to be made to how the HST is implemented as it pertains to new home purchases. HST would apply to services such as moving cost, legal fees, home inspection fees, and REALTOR® commissions. To continue reading the full article release, please follow the link to TREB (Toronto Real Estate Board).

Proposed Changes for New Housing Rebate || HST will apply to the purchase price of newly constructed homes. Originally, the provincial government indicated that it would provide a rebate to ensure that, on average, new homes under $400,000 would not be subject to an additional tax burden. Homes priced between $400,000 and $500,000 would be eligible for a portion of the rebate, and homes priced above $500,000 would be subject to the full HST. However, the provincial government is proposing some significant enhancements to these rebates, as follows:

• Enhanced new housing rebate – The province is proposing to enhance the new housing rebate so that new homes across all price ranges would receive a 75 per cent rebate of the provincial portion of the single sales tax on the first $400,000. For new homes under $400,000, this would mean, on average, no additional tax amount compared to the current system.

• New rental housing rebate – Similar to the enhanced new housing rebate, the province is proposing a rebate for new residential rental properties. This proposed rebate would support affordable rental housing across Ontario.

• Proposed Transitional Rules for New Housing - The province is also proposing transitional rules for new housing. Generally, as part of the transitional rules, sales of new homes under written agreements of purchase and sale entered into on or before June 18, 2009 would not be subject to the provincial portion of the single sales tax, even if both ownership and possession are transferred on or after July 1, 2010. The tax would also not apply to sales of new homes under written agreements of purchase and sale entered into after June 18, 2009 where ownership or possession is transferred before July 1, 2010.