HST Taxes and Rebates for Ontario Home Buyers
The 13% Harmonized Sales Tax (HST) took effect on July 1, 2010, under the administration of the Canada Revenue Agency (CRA).
Although HST has been in effect for a couple of years now, many first time and even seasoned home buyers in Ontario are confused about which real estate is taxable as well as what kind of options are available to offset the exorbitant fees associated with new home purchase.
In fact, many people are still confused as to exactly what HST is all about.
In Ontario, Harmonized Sales tax replaced the provincial sales tax (PST) and the federal goods and service tax (GST).
While it does not apply to the resale of homes, rental properties, semi-detached homes, and apartment buildings, there are specific rules that apply to newly constructed homes in Ontario.
This is something that home buyers need to be aware of before they set their cost limit for purchasing a new home.
This is because HST can cause a serious problem for those who do not have money left in their bank account after a home purchase has gone through.
To be clear, all newly built residences, including those that have substantially been renovated and previously subjected to the GST, will also be taxable at the HST rate of 13%.
After payment by the taxpayer, the amount will be segregated, with 5% going to the federal government and the 8% allocated to the provincial level.
Owners of these newly built homes must take full advantage of two rebates: 1.
There is a rebate on the 5% federal portion calculated the same way as it was before.
The rebate is 36% of the 5% federal portion for houses that have a value of up to $350,000.
The rebate decreases as the value of the home increases, until there is none at all once the value of the home reaches $450,000.
2.
As for the 8% provincial rebate, the Ontario new housing rebate is applicable.
As much as 75%, with a maximum ceiling of $24,000, will go back to the owner whose home does not exceed $400,000.
Once the value of the home exceeds this amount, the provincial rebate will no longer apply.
The Ontario provincial rebate is administered by the CRA, so builders can pay or credit the rebate to the buyer of the new home, as well as the GST new housing rebate.
The rebates can be claimed in one application form starting July 1, 2010.
There are currently five out of ten provinces in Canada that levy the HST: Ontario, New Brunswick, Newfoundland and Labrador, Prince Edward Island, and Nova Scotia, although with differing PST rates.
This article does not apply to provinces outside of Ontario, however, because not all provinces share the same HST rate or rules.
It is important to seek out information that is specific to your province.
Although HST has been in effect for a couple of years now, many first time and even seasoned home buyers in Ontario are confused about which real estate is taxable as well as what kind of options are available to offset the exorbitant fees associated with new home purchase.
In fact, many people are still confused as to exactly what HST is all about.
In Ontario, Harmonized Sales tax replaced the provincial sales tax (PST) and the federal goods and service tax (GST).
While it does not apply to the resale of homes, rental properties, semi-detached homes, and apartment buildings, there are specific rules that apply to newly constructed homes in Ontario.
This is something that home buyers need to be aware of before they set their cost limit for purchasing a new home.
This is because HST can cause a serious problem for those who do not have money left in their bank account after a home purchase has gone through.
To be clear, all newly built residences, including those that have substantially been renovated and previously subjected to the GST, will also be taxable at the HST rate of 13%.
After payment by the taxpayer, the amount will be segregated, with 5% going to the federal government and the 8% allocated to the provincial level.
Owners of these newly built homes must take full advantage of two rebates: 1.
There is a rebate on the 5% federal portion calculated the same way as it was before.
The rebate is 36% of the 5% federal portion for houses that have a value of up to $350,000.
The rebate decreases as the value of the home increases, until there is none at all once the value of the home reaches $450,000.
2.
As for the 8% provincial rebate, the Ontario new housing rebate is applicable.
As much as 75%, with a maximum ceiling of $24,000, will go back to the owner whose home does not exceed $400,000.
Once the value of the home exceeds this amount, the provincial rebate will no longer apply.
The Ontario provincial rebate is administered by the CRA, so builders can pay or credit the rebate to the buyer of the new home, as well as the GST new housing rebate.
The rebates can be claimed in one application form starting July 1, 2010.
There are currently five out of ten provinces in Canada that levy the HST: Ontario, New Brunswick, Newfoundland and Labrador, Prince Edward Island, and Nova Scotia, although with differing PST rates.
This article does not apply to provinces outside of Ontario, however, because not all provinces share the same HST rate or rules.
It is important to seek out information that is specific to your province.
