Q. After six years of scrimping and saving, my wife and I have are ready to buy our first home, a condo. Will the new harmonized tax affect our condo purchase?
— Jason and Terri
A. Ontario’s budget announced a replacement of the current Ontario sales tax (eight per cent) and the federal Goods and Services Tax (five per cent) with a 13 per cent Harmonized Sales Tax (HST). The new HST will apply to the purchase of new homes in Ontario beginning July 1, 2010.
This is not a welcome tax for the housing industry and homebuyers alike. The HST will effectively add 13 per cent of the sale price for a new home.
The province’s original announcement in March offered full rebates for homes priced $400,000 or less and partial rebates between $400,000 to $500,000, then completely phased out greater than $500,000.
However, the premier’s announcement on June 19 made slight changes and will provide rebates on the first $400,000 price of all homes including higher priced houses.
The current five-per-cent GST would apply to closings prior to July 1, 2010.
– Henry Choo Chong, CGA, can be reached at email@example.com and 416-485-5225.