Over the years, the Toronto real estate market has been hit with a significant amount of tax increases. Goods and Services tax was the first to be implemented on January 1st, 1991. This tax was added on to new housing and Realtor services. As a result, the cost of housing and Realtor services often increased for the consumer.
Recently, we have been hit with not only a municipal land transfer tax, but now the implementation of a Harmonized Sales Tax beginning July 1st, 2010. Outlined below are some points of interest for the average Real Estate consumer…
· PST of 8% will be added on to all new home sales and all closing costs, bringing the total tax revenue to a resounding 13%
· Currently, the average consumer is only paying GST at 5% as new home sales are exempt from PST.
· It has been previously stated that new homes worth less than $400,000 will qualify for a 6% tax rebate. However, new homes worth more than $500,000 will be subject to the full tax. This could equal an additional $30,000 based on a $500,000 new home sale. Obviously, this will hit Toronto hard as we have very few new homes in this city valued under $500,000!
· On to Closing Costs…According to Von Palmer, Chief government and media relations officer for the Toronto Real Estate Board, HST will add approximately $2000 extra per sale for closing costs such as home inspections, lawyers etc.
· On to Maintenance Fees…Condominium owners can expect a significant hike is maintenance fees up to 8% due to the additional PST charged on all services not currently incurring this tax.
All in all, the harmonization of GST and PST is not ideal for the Real Estate market. Let’s hope some new rebates will be implemented in this program prior to July 1st, 2010 to smooth over what will surely be a difficult transition.
For more information, concerns or comments, please do not hesitate to contact me.
**All information documented by the Toronto Real Estate Board.**
