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Looming Threat For Homebuyers & HST Comparison Chart

First, the good news....there is no HST tax payable on the sale of a resale home (residential). So the single largest dollar amount exchanged is not taxable under HST.

However, under the harmonized sales tax (HST), home buyers and sellers will have to pay extra tax on a range of services associated with the real estate transaction: services such as legal fees, moving costs, real estate commissions and home inspection fees. Currently, consumers only pay the 5% Goods and Services Tax (GST) on these services.

In a nutshell, after July 1, 2010, if you are a seller, there will be a 13% percent tax payable on the real estate commission you pay - currently there is only the 5% percent GST payable on this fee. Your lawyer's fee will also be subject to the 13% percent HST. One bit of good news - the cost of a Condominium Status Certificate will remain the same; while there will be HST at 13% instead of GST at 5%, there cannot be an increase in the legislated maximum total amount of $100.

If you are a buyer, any Home Inspection you pay for will be subject to the 13% percent HST and so will the cost of movers hired. In addition, the cost of the CMHC premium for "high-ratio" mortgages has traditionally been taxable for PST - this amount will now be taxable for the full 13% percent HST.

So one can see that, with the introduction of the HST, whether you are buying or selling a Resale Home in Ontario, costs will be going up.

Comparison Chart

Type of Good / Service

PST

HST

Effect

Admissions

Non-taxable

Taxable

Increased cost

Admissions under $4

Exempt

Taxable

Increased cost

Advertising services

Non-taxable

Taxable

Increased cost

Cleaning services

Non-taxable

Taxable

Increased cost

Commercial rent

Exempt

Taxable

Increased cost

Commissions

Non-taxable

Taxable

Increased cost

Custom software

Exempt

Taxable

Increased cost

Dry Cleaning

Non-taxable

Taxable

Increased cost

Gas for automobiles

Non-taxable

Taxable

Increased cost

Goods for resale & raw materials

Exempt

Taxable

Increased cost

Basic Groceries

Exempt

Exempt

No change

Internet access

Non-taxable

Taxable

Increased cost

Magazines (conditions apply)

Exempt

Taxable

Increased cost

Manufacturing equipment

Exempt

Taxable

Increased cost

Membership fees (fitness, golf, etc.)

Non-taxable

Taxable

Increased cost

Mortgage interest

Exempt

Exempt

No change

New homes

Exempt

Taxable

Increased cost

Newspapers

Non-taxable

Taxable with Point-of-sale rebate

No change

Personal services (haircuts)

Non-taxable

Taxable

Increased cost

Prepared food - restaurants

Taxable

Taxable

No change

Prepared food - restaurants - under $4

Exempt

Taxable with Point-of-sale rebate

No change

Professional fees - legal, accounting, consulting

Non-taxable

Taxable

Increased cost

Real property contracts

Non-taxable

Taxable

Increased cost

Residential rent

Exempt

Exempt

No change

Safety clothing

Exempt

Taxable

Increased cost

Seminars / Conferences

Non-taxable

Taxable

Increased cost

Shoes under $30

Exempt

Taxable

Increased cost

Soft drinks and snacks

Taxable

Taxable

No change

Taxi, limousine

Non-taxable

Taxable

Increased cost

Telephone

Taxable

Taxable

No change

Utilities - gas, hydro, fuel, cable

Non-taxable

Taxable

Increased cost

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