HST on Resale Homes, New Homes and Rental Properties Ontario

From time to time clients ask me for clarification on how HST effects purchasing a home.  I have compiled everything you need to know about HST and purchasing real estate in Ontario. 

The Basics on how the Ontario HST effects a Home Buyer, Seller and Tenant in Real Estate. 
  

How to calculate HST in Ontario - Real Estate:  

The Ontario provincial government has combined the 8% PST (Provincial Sales Tax) with the 5% FST (federal Goods and Services Tax), creating a new 13% HST - Harmonized Sales Tax

The HST came into effect on July 1, 2010:

• HST does NOT apply on the purchase price of re-sale homes.
• But, HST DOES apply to services such as moving cost, legal fees, home inspection fees, appraisal fees, labour for renovations, landscaping and REALTOR® commissions if applicable. 
• It is estimated the average home buyer will likely pay $1200 - $1500 additional cost in HST fees when moving.
• HST applies to the purchase price of newly constructed homes. However, the Province is proposing a rebate so that new homes across all price ranges would receive a 75 per cent rebate of the provincial portion of the single sales tax on the first $400,000. (so that's basically a savings up to the first $24,000 hst)
• For new homes under $400,000, this would mean, on average, no additional tax amount compared to the current system.

Transitional Rules for New Housing if your purchased before July 1st and your home has not yet closed.

• Generally, sales of new homes under written agreements of purchase and sale entered into on or before June 18, 2009 would not be subject to the provincial portion of the single sales tax, even if both ownership and possession are transferred on or after July 1, 2010.
• The tax would also not apply to sales of new homes under written agreements of purchase and sale entered into after June 18, 2009 where ownership or possession is transferred before July 1, 2010.

Is there HST on Rent?

If you are currently renting a house, condo or townhouse on a long term bases (or month to month) you are currently not paying GST, therefore, HST will not apply.   However, expect that the Landlord will have increased costs for the goods and services he uses, such as labour for repairs, landscaping etc.   With increased costs to the owner, increases in rental rates in the future might be expected.  

Information on 2010 Rent Increase guidelines and if a Landlord can increase your rent.

Is there HST on Condominium Maintenance Fees?

Currently there is no GST charged by Condominum Associations.  But as the HST takes effect, many services associated with the common maintenance of the building will be subject to HST.  It makes common sense to expect some adjustments in the future monthly fees. 

Is there HST on Commercial Rents:

GST and Commercial GST applies to most of the rentals of commerial real estate properties with limited exceptions.   Therefore expect HST to apply.

• With regard to the lease or license of goods, including non-residential real property, HST will generally apply to lease intervals or payment periods on or after July 1, 2010 and the general rules noted above will apply. However, where a lease interval begins before July 2010 and ends before July 31, 2010, it is not subject to HST.

With regard to the sale of non-residential property, HST is due where both possession and ownership of non-residential property occurs on or after July 1, 2010.

More DetailsIf you have more Questions about the HST, additional details on the transition rules is available at the provincial government web sitehere or by calling the provincial government enquiry line at 1-800-337-7222.