HST for real estate
The lack of details about HST is about to be rectified. Please read this slowly. For NEW HOUSING only, there is an additional 7% tax on the purchase price of a new home (it used to be only the 5% GST) BUT there is a REBATE .....for properties up to $525,000 in value. The Maximum rebate is $26.250...which on a $525,000 price works out to be 5% which is the percentage amount rebate-ed on purchase prices under $525,000. The formula is 71.43% of the 7%. NOTE that this is in addition to the existing rebate on GST paid which is 36% of the 5% to a maximum of $6300.....which is at a purchase price of $350,000.
SOooooo......If you buy a new apartment at $350,000, you will pay 12% HST = $42,000 Tax
BUT you will be rebated 36% on the gst portion (= $6,300)
PLUS 71.43% of the 'provincial' portion ($17,500) - 23,800 rebate
Net increase in cost to the home buyer is $18,200.
IF you bought at the $525,000 maximum, you would only receive the HST 'provincial portion' rebate of $26,500
so you would pay $63,000 in HST tax and get back $26,500 for a net TAX of $36,500 which is $10,500 MORE than what new home buyers have been paying up to July 1, 2010.
If you bought an $800,000 home, the HST would be $96,000 less the $26,500 rebate = $69,500 net tax which is $29,500 MORE in tax than under the previous system that only had GST attached to it.
Rebate qualifications;
-it must be your principal residence
-covers new houses including land, new houses and leased land, new moblie & floating homes, new homes purchased through shares in a Co-op.
FOR BUILDERS;
Builders have always been able to claim a refund of the 7% Provincial tax paid on materials, and will continue to claim that amount under the HST. The idea is that because there is no net increase in cost to the builders, they will be able to reduce the price on a $551,500 home (to $525,000) to offset the increase in tax that the buyer will pay. So negotiating is the key.