BOO! HST is coming! If you’re thinking of buying a new home in Ontario or BC, now is the time to do it.

As of July 1, 2010, the BC and Ontario governments will implement a Harmonized Sales Tax (HST). The HST combines the existing GST (5%) with the PST (7% in BC and 8% in Ontario) to create a single tax that applies to more products than the PST alone. While there may be certain advantages to an HST, its effect on real estate will be dramatic and negative.

Currently, new home purchases are subject to GST. But starting July 1st, new homes will be subject to the entire HST. This means that buying a new house will cost 8% more in Ontario and 7% more in BC. For example, if you’re buying a $500,000 house (not unusual in either of these markets), you’ll pay $40,000 extra in Ontario and $32,000 extra (less a $20,000 flat rebate) in BC. Kind of puts new urgency into your shopping plans, doesn’t it?

But it gets worse. Realtor commissions, legal fees and the price of appraisals, land surveys, home inspections, landscaping, renovations and more will all rise. Sure you could try to stay under $400,000, since new properties under that level are exempt. But try to find a new house or condo in Toronto or Vancouver under $400,000. Good luck!

Another option is buying a resale home since, as is currently the case, no tax is payable. However, as mentioned above, all associated home buying expenses will still be higher.

The only foolproof way to avoid the HST is to buy BEFORE next summer. And as it turns out, that’s a great idea anyway. Prices still haven’t reached their previous highs in most areas and interest rates are near historic lows. If you’re interested in avoiding the HST, talk to me today. I can pre-approve you for mortgage financing at a highly competitive rate, so you’re ready to buy the moment the right house comes along!

Lisette Amalfi
(905) 529-1199