Harmonized Sales Tax
Just as the Real Estate Market is begins to recover, Realtors and Developers are concerned about Ontario's new proposed harmonized sales tax (HST) introduced by the Ontario Government in its March 2009 Budget. Under current laws, new homes and condos face a 5% GST but are are exempt from PST. Under the new HST, The proposed tax, will merge the PST and GST into a flat 13% rate, set to be introduced on July 1, 2010. New homes priced less than $400,000 will qualify for a 75% tax rebate, but new homes priced above $500,000 will be subject to the full HST (5%GST+ 8%PST = 13%HST). This could mean an additional $30,000 on a $500,000 home. At present, the price of a $500,000 home includes about 2% in provincial sales tax on construction materials.
Beginning July 2010, the HST will be applied on all new homes. Housing costing less than $500,000 will be eligible for as much as six percentage point tax rebate, but anything priced above that gets the full 13% tax.