Impact of HST on the Real Estate market in Ontario

On July 1, 2010 the new Harmonized Sales Tax (HST) will become effective in the Province of Ontario. The HST will combine the 5% GST and 8% PST into one tax (13%) and will apply tomost goods and services that previously only charged the GST.

The HST will have a tremendous impact in several areas of the Real Estate market:

- new homes, which are currently exempt from PST, will be subject to the HST. The homes under $400,000 will qualify for the 6% rebate, full HST  will now apply to the homes over $400,000.
- the closing cost (real estate commissions, lawyers fees, supplies, courier services etc.) will be subject to the HST.
- the cost of hydro, natural gas will increase by 8% (previously only GST applied to these).
- in condominiums the maintenance fees will be increased to accommodate the more expensive fees for the property management, repairs and other services that will also be subject to the HST.
- for the same reason rents  might increase to cover the more expensive operating cost of the rental buildings.

To soften the impact of the HST on the consumer, the province promises the HST rebates when filing for the income taxes but it is to be seen what the rebates will be and who will qualify to receive them.

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