Q. I am in the process of purchasing a new condominium which is not scheduled to close until 2011. My developer has produced a long 20-page contract that is full of all kinds of legal jargon and page upon page of small print that I don’t understand. One of the biggest questions I have centres around the new Harmonized Sales Tax that is supposed to be imple­mented for new home constructions that close after July 1, 2010. I am at a loss as to what to do.

This first thing you need to be aware of is that you have a 10-day cooling off period after your offer is accepted by the builder during which you can decide whether you really want the unit and if it suits you. This is a time when you can take your agreement of purchase and sale to a lawyer for review.

As you are aware, the Ontario provincial government brought in legislation last June to introduce a harmonized sales tax (HST) which it is thought will affect the purchase of new homes but not resale transactions. The percentage figure is an additional eight per cent which on a $600,000 home could be an additional $48,000 in taxes.

The magic figure that is being bantered around is that any new home under $400,000 in value that is being purchased by first time home buyers will be exempt from the HST. Considering that the average home in the Toronto area is approaching $400,000, that leaves a lot of people still paying some of the HST.

A second more confusing aspect to all of this is who is responsible for paying the HST. It has been our position as lawyers acting on behalf of purchasers that if at all possible, the builder should be the one bearing the cost of the HST; however, as July 1, 2010 fast approaches, more and more builders are transferring this cost to the purchasers. An exception to this rule is if you signed an Agreement of Purchase and Sale before June 18, 2009 prior to the provincial government introducing this new levy.

Needless to say, there is still vast confusion about who pays and what are the cutoff dates and purchaser amounts under which you pay nothing, a portion or all of the HST.

We are currently seeing dramatic increases in sales and prices in real estate in the GTA with first time homebuyers eager to enter the market and take advantage of low interest rates and pre-HST price hikes.

How this will affect the housing market post July 1, 2010 is anybody’s guess.