HARMONIZED SALES TAX- Commission/condo fees/government links

HST FEE JULY 1

So many people are asking if there are exceptions to the charge. The HST will be charged on Commisions.

What I can determine is as follows:

• If the deal is firmed up before july 1 and closes after July 1 - 5% gst is charged
• If the deal is 90% done before July 1 , and firms up after that possible 5% depending on what needs to be completed.

• Otherwise anything after July 1 is 13%

$200,000 @ 5% commission is $ 10,000.00 .This is split four ways ( Buyer, Agent, Seller Agent, Buyers Broker, Sellers Broker )

HST would be13% or $ 1300.00 cdn funds.

Please access all government web sites in first HST article. New Homes tend to be a bit more complicated . There is a grandfather clause which I have not covered. This depend on how much of the home is constructed before and after.

HST CONDO FEES YES or NO ?

Thursday, April 8th, 2010 7:15 pm

The HST will not be on Condo Fees. However the unfortunate thing is most of the components of a Condo Fee are made up of services. Landscaping, Maintenance and Repair. As of July 1st These services will have HST 8% which is added to the 5%( GST) . The total tax is 13%. I understand water may not have HST but have not verified this.

So it is safe to say you will see budgets " stretched" and yes Condo Fees will increase by around 5% to 8%. There will be pressure on contractors to lower their prices as well.

So yes there is HST ( sort of ) ,

HST Fact CheckList - Real Estate

I wanted to post some general information on HST. Many people are asking questions so I hope this clears things up.

HST is 13% . It is considered value added Tax.

If you are Selling your home:

Real Estate Agents who normally charge 5% GST on commissions will have to charge 13%. This is regarding resale homes and is on the commission only. This will be on July 1, 2010. There are some exceptions but on a regular resale home. This is the tax that would apply.

If you are buying a Resale home extra costs will be incurred HST will be charged on home inspections, legal services, high ratio mortgage premiums, fire insurance premiums.

OREA estimates the HST will add $1,449 in new taxes to an average resale home costing $302,354. And, OREA claims the HST will add an estimated $262 million in new taxes annually to residential resale real estate transactions.

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RE new Homes: Builders would use the same process they use with regard to GST. The Buyer must qualify for the rebate. ( The new home would be a primary residence ) Clarify your HST before signing on the dotted line and read the fine print.

Under the HST, new homes worth less than $400,000 will qualify for a 6% tax rebate, but new homes worth more than $400,000 will be subject to an additional 8% tax. To explain if a buyer pays $500,000 the net tax would be $ 16,000.00 after receiving the rebate of $ 24,000.00

Here are some helpful Links.

http://www.servicecanada.gc.ca/eng/goc/gst_new_housing.shtml

http://www.fin.gov.on.ca/english/index.html

http://www.rev.gov.on.ca/english/guides/rst/206.html

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/menu-eng.html

All information deemed reliable but not guaranteed. Please seek the advise of your tax professional and contact government agency to clarify your costs. As I deal with residential resales it appears the impact will be minimal. I encourage real estate to be a long term investment. Hope this information helps.

Carl