HST And How It Affects You When Buying A Home

The Facts of Life. Birth, death & taxes Harmony Sales Tax that is.Since July 1, 2010, Ontarians have been subject to a 13% HST of which, 5% is federal and 8% is provincial. Not all real estate transactions are exempt from this necessary evil, and it is often confusing to buyers and sellers as to what types of properties will be taxed.

Most resale homes are exempt from HST. That is, as long as you have not done any major renovations or additions. Housing that has undergone major renovations is treated virtually the same as new construction. In general, "a substantial renovation is considered to have taken place where all or substantially all of the interior of a building, with the exception of certain structural components (the foundation, external walls, interior supporting walls, roof, floors and staircases), has been removed or replaced. To find out how the government classifies "substantial renovations" and how you can receive a tax rebate log on to

http://www.cra-arc.gc.ca/E/pub/gm/b-092/b-092-e.pdf.

New home sales are taxable but will qualify for GST, HST & transitional rebates (subject to certain thresholds and maximum amounts). Purchasers of new homes in Ontario will be eligible for a rebate of 75% of the provincial component (i.e., 8%) of the HST paid to a maximum of $24,000. Sales of new homes above $400,000 will remain eligible for a maximum rebate of $24,000 (i.e., a rebate on the first $400,000 value).

In addition to the GST and HST rebates available to purchasers of new homes there are 2 other rebate programs relating to real estate during the transitional period:.

a) Ontario Transitional New Housing Rebate

b) Ontario Inventory Rebate for Contractors

Commercial real estate sales and leases are also subject to HST. However, long term residential rentals are not taxable.

Many buyers and sellers can be overwhelmed by the complexities of tax issues. Whether it be HST or Land Transfer Tax , be sure to ask your local REALTOR® and always follow up with an accountant or lawyer to be sure you understand what taxes will be due on your next real estate transaction.