The Impact of the Ontario HST
Many of my clients have been asking me questions about the new HST tax and how it will affect them in buying a home
or selling a home in Ontario. Here is a brief summary of what to expect:
The Ontario Government's new Harmonized Sales Tax ( HST) will take effect on July 1, 2010. The HST tax will
effectively combine the provincial sales tax (PST) of 8% with the federal goods and services tax (GST) of 5% to create
a new harmonized sales tax of 13% (HST). The new tax will apply to some real estate services associated with the real
estate transaction which only had PST or GST applied.
After July 1 if you are a seller you will be paying 13% HST on real estate commissions . Currently there is 5% GST
payable on this fee. Your lawyer's fee will also be subject to the 13% HST as will the cost of the condominium status
certificate , mandatory energy audits, moving costs and home inspection fees if applicable. Currently the 5% GST is
payable on these services as well.
If you are a buyer you will be paying 13% HST on a home inspection , your legal fees, a home appraisal and the cost of
movers. A full 13% HST will now be charged on the CMHC ( Canadian Mortgage and Housing Corporation) insurance
premium for high-ratio mortgages ( Mortgages with down payments of less than 20%). The tax on CMHC insurance
premiums has traditionally been just the 8% PST.
On a hypothetical $360,000 resale real estate transaction the HST will add approximately $1500.00 to your closing costs
if you are selling ( assuming the standard 5% real estate commission) and $587.00 to your closing costs if you are
buying (assuming a 5% down payment , 2.75% for CHMC premium)
Services for maintaining a home will also be HST taxable as of July 1, 2010. Services such as : utilities, home
renovation labour, lawn upkeep or landscaping services, snow removal and a portion of your maintenance fees if you
own a condo. The Ontario Real Estate Association estimates that HST will add $480 in annual tax if you are budgeting
$500 per month on such costs.
For the purchase of new homes the HST will apply to homes above $400,000. Currently GST only is applied to the
purchase price of new homes.
So, if you are planning on purchasing a home in 2010 keep the July 1, 2010 date in mind.
For more information please go to: http://www.cra-arc.gc.ca/agency/hrmnztn/menu-eng.html or contact me at 416-520-
6746 or by email at David@TorontoRealEstate.ca.
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David Stoddard B.A., M.A., A.B.R.
Your Real Estate Consultant & Advisor... For Life
Office: 416-691-8118 ext. 329
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