Question: Is there HST when Buying a home?
Answer: When you buy a Resale Home there is no HST. When you buy a Newly Built Home there is HST.
I still get this question from time to time even though the HST came into affect July 1st 2010. It happens so often that the Toronto Real Estate Board has put out the following flyer:
For those still confused lets recap:
H.S.T stands for Harmonized Sales Tax. Instead of having the 5% Federal Goods and Service Tax (GST) + the 8% Provincial Sales Tax (PST). On July 1st the government combined the two into one 13% Tax. Purchasers of New Homes had always been charged HST but no PST. On July 1st, New Homes became subject to the HST; Resale Homes were never charged GST or PST so on July 1st they continued to be exempt.
Services related to the buying of a home that charged GST only or GST and PST are all now subject to HST. Most items had no change but fees for Lawyers and Real Estate Commissions, Home Inspections and Appraisal fees that used to only have GST at 5% now have HST at 13%.
So on July 1st, there was an increase in taxes on new homes (the PST portion of the HST). Fortunately, the provincial government provides a rebate of 75% of the PST on the first $400,000 of a newly constructed home, or a maximum of $24,000.
Many builders, in order to simply the process, include the HST into the purchase price and have the purchasers assign to the builder all the government rebates that apply. This is great, as it allows buyers to compare prices of Resale homes and builders asking prices without trying to figure out the taxes and rebates.
Still Confused? For clarification by leaving a comment below.