Harmonized Sales Tax is coming July 1, 2010!
Author: Bernice McNutt // Category: Durham Region Real EstateIf you have read my past blogs, you know that I am opposed to the new Harmonized Sales Tax (HST), and I did try to get as many people as possible to write all the politicians they could, in order to have the new tax defeated. This didn’t work and it looks like we are going to have the new tax, like it or not. So let’s embrace the new tax!
The Ontario provincial government has announced that it intends to combine the eight percent Provincial Sales Tax wit the five percent federal Goods and Services Tax, creating a thirteen percent HST. The tax is not yet in effect, but will start on July 1, 2010. While the new tax will not apply to the purchase price of a re-sale home, it will apply to services such as moving costs, legal fees, home inspection fees and Realtor® commissions.
There are transitional rules that will apply to HST and Realtor® commissions. The HST will general apply to services, expressed as a percentage, that the services are performed on or after July 1, 2010. However, if 90% or more of the services are performed before July 1, 2010, the HST will not apply.
For example, if I am selling your home and list it on June 1, 2010, receive an offer on June 15, 2010 and the transaction closes on July 2, 2010 then, since more than 90% of my services were performed before July 1, 2010, only GST will apply to the commission at that time.
In another example, let’s say that my services to sell your home are performed from May 1, 2010 to July 31, 2010 with the sale of your home closing on July 31, 201o. Since 2/3 of my services were performed from May 1, 2010 to June 30, 2010, only 1/3 of my services were performed after the July 1, 2010 HST start date. You would be charged GST on 2/3 of the commission and HST on 1/3 of the commission.
Sure, the new rules are a little confusing, but we’ll figure it out. You should keep in mind that while my topic covers how HST will affect home sales, it will also affect all business owners. Keep in mind that if you have a GST number and are able to get GST rebates, you may want to hold off on large purchases that are currently subject to 8% PST. If you buy the item after the HST comes into effect, you can apply for the HST rebate.
Tags: bowmanville real estate, harmonization tax, home selling, oshawa real estate, tax credit, whitby real estate
February 15th, 2010 at 9:02 pm
This article was helpful in a paper I am writing for my thesis.
Thanks
Bernice Franklin
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February 17th, 2010 at 6:31 pm
If the economy turns up, the government stands to gain due to increased tax revenues. The people can figure on another seven years of famine, though.
March 25th, 2010 at 10:34 pm
So if I understand correctly, If I buy a house in March 2010, but it won’t be ready until August 2011, then the full 8% rebate applies?
I thought that you get a 75% rebate on the PST portion, therefore 2%???
April 23rd, 2010 at 2:44 pm
Hi Drew. Sorry for the slow response. My blog did not have information on the HST and how it affects new home sales and the rebate that applies to them. You are correct in stating that there isn’t 100% rebate on the taxes paid for a new home sale. I will cover how the HST will affect new home purchases in another blog. Stay tuned!
October 30th, 2010 at 3:10 am
Maybe you could make changes to the blog title Harmonized Sales Tax is coming July 1, 2010! | Durham Region Real Estate Blog to more generic for your blog post you create. I loved the blog post yet.