No one likes to hear about new taxes, so many people in several Canadian provinces were upset when they heard about the plans for the harmonized sales tax. The truth is that the HST, as the harmonized tax is abbreviated to, is in most cases just a marriage of two taxes we already pay, the provincial and goods and services taxes. Owners of Thornhill real estate will be paying the same tax on groceries and gas, there is just less processing for business owners. However, there are some cases in which an individual will find themselves paying more tax in transactions.
One of those cases is the purchase of real estate in St. Catharines or anywhere else in Ontario. In fact, all the provinces implementing the HST are increasing tax paid on certain types of Markham Ontario real estate and other cities within their jurisdiction. Most people have realized this already, but do not have a good grasp of how it will really affect them. Let's take a look at how the HST will impact those buying new homes after it has been implemented in July.
Up until the introduction of the HST in Ontario and British Columbia, buyers paid 5% goods and services taxes when they bought a home. This was usually part of the closing costs and nobody really noticed. However, the new united tax will apply to home sales, and that means a 13% tax, impossible for sellers or developers of a Toronto townhouse to quietly pass on. It should be noted here that the tax is applied to new homes and specifically to builders; if you are purchasing a resale home on a piece of Oakville real estate your builder won't be dinged, so neither will you.
There is also good news for those purchasing outside of the big cities in the two provinces. Both governments have stated that they will provide a tax exemption on the first $400,000 of any new home bought. That means most people buying for the first time outside of the major cities in the area will not be paying any taxes at all on the purchase of the home, great news for those buying Kamloops or Pickering real estate.
However, if you live in Toronto or Vancouver, and even Mississauga, you will be looking at some significant taxes when you buy a new home. Houses over $400,000 will have the tax levied, although you can still apply that exemption on the first $400,000. Most Toronto homes, and all Vancouver homes, sell above that price. That means home buyers can expect to pay from $6000 and up in taxes when they buy a new home, assuming the tax is passed on to the consumer (which it will be, in one way or another).
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