Rob Fer­gu­son – Yourhome​.ca

When it comes to the 13% har­mo­nized sales tax kick­ing in July 1, lots of home buy­ers and sell­ers appear to be in for a big sur­prise, says the Cana­dian Real Estate Association.

“I run into peo­ple who still don’t know its com­ing,” says asso­ci­a­tion pres­i­dent Pauline Aunger. “There are peo­ple who don’t lis­ten to the news or read the newspaper.”

The con­tro­ver­sial tax doesn’t apply to resale homes, but it does hit new ones — with a 75% rebate on the first $400,000 of the price tag — as well as real estate com­mis­sions, legal fees, home appraisals and mov­ing costs.

Aunger urges peo­ple buy­ing or sell­ing homes and con­dos to close their deals before Canada Day if pos­si­ble, not­ing the aver­age buyer of a re-sale home could save about $1,500 by beat­ing the con­tro­ver­sial new tax.

The HST is a mar­riage of the broadly based 5% fed­eral Goods and Ser­vices Tax — already charged on the above items and most goods and ser­vices — and the 8% provin­cial sales tax in Ontario, which does not now apply to real estate com­mis­sions, new homes and the like.

That means an extra 8% in taxes, although the gov­ern­ment notes it cut income taxes Jan. 1 to help off­set the HST hit.

For exam­ple: the real estate asso­ci­a­tion cal­cu­lates the addi­tional tax at $80 on typ­i­cal legal costs, $1,209 on sales com­mis­sions, $32 on home inspec­tions, $80 on mov­ing and $24 on home appraisals.

“If you’re buy­ing, go out and buy now,” advises Aunger.

The jury is still out on whether the fast pace of home sales and ris­ing prices is due to the loom­ing HST, because experts say low inter­est rates are also play­ing a role.

It’s gen­er­ally too late to avoid the HST on pur­chases of new homes because the gov­ern­ment has ruled that deals to buy houses after June 18 are sub­ject to the tax, says pres­i­dent Stephen Dupuis of the Build­ing Indus­try and Land Devel­op­ment Association.

“Since last June, most of what you buy is for clos­ing after this July 1, because most new homes are pre-sold and then it takes time to build them,” he explains. “Whether peo­ple know they’re still pay­ing the HST or not, they’re still buy­ing like crazy. We hon­estly don’t expect a blip after July 1.”

On a new home cost­ing $500,000, the extra provin­cial por­tion of the HST totals $40,000. The 75% tax break for the first $400,000 is grad­u­ally phased out as the price rises above $500,000.

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