HST 101: For Homeowners

What says "Happy Canada Day" better than a new tax? Nothing - according to the provincial governments in B.C. and Ontario. On July 1, the residents of those two provinces must now pay the Harmonized Sales Tax on a variety of goods and services that were once only subject to the GST. Homebuyers aren’t immune to the new charge, but there are certain things these two governments are doing to make the new tax sting a little less. Essentially, the HST will only impact those homebuyers who are building or purchasing a newly-constructed home, or substantially renovating their homes. Individuals who are purchasing resale homes are exempt from the new tax. For those that fall into the first category, both governments are offering tax rebates. In B.C., purchasers of newly built homes will be eligible to apply for a maximum rebate of $26,250 — with more rebates potentially available if construction spans the July 1 implementation date. In Ontario, all buyers get a rebate of $24,000, regardless of the purchase price. So that’s the same as paying no tax on Many homebuilders have included the costs of HST and the associated rebates under the plan directly into the purchase price. In these cases, the rebates normally available to a homebuyer are assigned to the developer. Information about whether the HST and rebates are included in the purchase price is included in the agreement of purchase and sale. If the developer has not included the HST and associated rebates into the price of the home being built, homebuyers must apply to the federal government for the rebates and wait for the forms to be reviewed and approved. As a result, these amounts must be financed by homebuyers during the intervening period. Certain costs associated with buying and selling of homes will also be impacted. Such items as legal fees and real estate commissions will now be subject to HST.