August 2010 – As confusion grows around the HST, people are becoming increasingly wary of where the new tax is costing them more money. Many are especially concerned with how the tax will affect the price of a new home, and the cost of home maintenance, utilities, and other related expenses.
What is the HST?
The Harmonized Sales Tax (HST) is a single valued-added tax that has been introduced in Ontario as of July 1, 2010. The tax replaces the federal Goods and Services Tax (GST) and Provincial Sales Tax (PST), and it is applied on most purchases in the province of Ontario. According to the CBC, one in six goods and services is more expensive in Ontario with the new tax.
How the HST Affects Home Buyers
One of the most confusing elements of the new tax system is how it affects the sale of new homes. The HST is not applied at all to the sale of resale homes, but it is factored into the sale of new – meaning newly constructed or heavily renovated – homes. This is scaring a lot of people away from purchasing a new home, but there is more to be understood about the issue. Everyone buying a new home is entitled to apply for a rebate from the government of Ontario. In many cases, this means you actually might be saving money by buying a new home. The Ontario Ministry of Revenue explains this on their website:
“This rebate ensures that buyers of homes priced up to $400,000 (about three-quarters of new homes built in Ontario) will, on average, pay no more – or possibly even less – tax than under the PST system.”
For new homes being purchased for more than $400,000, there will be an increase in cost due to the HST, but in many cases, buying a new home can still help shield owners from paying more HST.
Where You Will Avoid the HST If You Buy a New Home
· Choosing a Home
The HST is applicable on realtor fees, which will raise the process cost for most people buying a resale home. Many of those who purchase new homes, on the other hand, do business directly with a new home builder.
· Doing Repairs
Not having to do major home renovations has always been a hugely positive feature of buying a new or custom home. When you move into a new home built by a quality home builder you trust, the house won’t need renovations. That isn’t usually the case when you purchase a resale home. It’s well known that home renovation costs can add up quickly, and now that the HST is applied to the cost of home repairs and many building materials, repairs will be even costlier.
At Neilcorp Homes, we’ll build you the new home you’ve always dreamed of. In the beautiful riverside community of Almonte, just 17 minutes from Kanata, we offer award-winning, high-quality, and affordable new homes for sale with more customization options than you’d ever expect when looking for a new home in Ottawa. We offer more standard features – up to $100,000 in added value and upgrades – on 50′ and 60′ oversized lots.