Real Estate Curve

Here is a brief summary from OREA regarding the Ontario Harmonization Sales Tax…
The Provincial government will, starting July 10, 2010, convert the Provincial Sales Tax (PST) to a value-added tax structure and combine it with the federal Goods and Services Tax (GST) to create a single federally administered harmonized sales tax. The single sales tax would have a combined tax rate of 13 per cent. The provincial portion is eight per cent and the federal portion is five per cent. To provide targeted relief, point-of-sale rebates would be introduced for the provincial portion of the tax for the following items: books, children’s clothing and footwear, children’s car seats an car booster seats, diapers and feminine hygiene products. Currently, the PST applies to building supplies used in construction of new homes. The single sales tax would remove this embedded tax. To ensure that, on average, new homes under $400,000 would not be subject to an additional tax burden, the government is proposing a new housing rebate. Homebuyers will be able to claim a rebate of part of the provincial portion of the tax for new homes priced up to $500,000. The rebate for new primary residences under $400,000 would be 75 per cent of the provincial portion of the tax (or six per cent of the purchase price) with the rebate amount reduced for homes priced between $400,000 and $500,000. Resale homes would not be subject to the single sales tax. However, this Budget makes no exemption for services associated with resale home transactions. Under the proposed sales tax harmonization, legal fees, real estate commissions and home inspection fees will be subject to the harmonized sales tax at a rate of 13 per cent.