How HST will Affect Home Buyers
There are too many stories hovering around in the market related to HST implications on home buyers. Just to educate my clients, I thought, I shall put forward some fact related to this new rule, which is getting in effect July 1st 2010.
The first thing you should know is that the HST will not apply to resale homes. This means you wont have to pay extra tax on homes that have already been lived in and are not brand new. However, the HST does apply to services related to real estate transactions including legal fees, real estate commissions, home inspections and moving costs. OREA estimates that you’ll pay an additional $1,500 on the average residential real estate transaction.
If you’re planning to buy a new home, the HST will apply, but what you should know is that you’ll receive a rebate of up to $24,000 on homes that cost $400,000 or less. Ontario Government says this will make it so the average home buyer doesn’t pay any more than they did on the PST system.
Unfortunately, if your sights are set on new homes over $400,000, which they may very well be if you’re a city dweller, you will be subject to the additional eight percent tax, so the total cost of acquisition have to be calculated, before you sign on the doted lines.
National Post article on the HST quoted the spokesperson for the Ontario Ministry of Finance, Alicia Johnston, as saying, “Only 7% of home buyers will be affected by the new tax.” If you are part of this 7% and are planning to buy soon, it may be worth your time to start working with a real estate agent and squeeze in some extra viewing's to see if you can find the home you’re looking for before the HST comes into effect this summer.