GST & YOUR NEW HOME (New HST Info)

When you buy a newly constructed home, condominium or town home, the entire purchase price including land is taxable. If the property is to be rented to tenants, the full 5% GST is charged on the purchase price. However, if the home is going to be your primary place of residence, it may qualify for a partial GST rebate, depending upon the sale price.

 

GST and Land

 

Buyers who purchase land separately may have to pay GST on the sale price depending on the previous use of the land. When you build a new home on your land, then you will pay GST on the construction costs of the house, less any applicable rebate. The rebate would be the same as for a new home, when the total value of the land and home is $350,000 or less, the rebate would be 36% of the GST paid on the building and the land to a maximum of $8,750. When the total value of the land and house exceeds $350,000 but is less than $450,000, a proportional formula for calculating the GST rebate applies.

 

GST and the Resale home

 

You do not have to pay GST on the purchase price of a used residential home. In other words, the purchase is 'exempt' from GST. The Canada Customs and Revenue Agency defines 'used residential property' to include a previously occupied house, condominium, apartment, summer cottage, vacation property or non-commercial hobby farm, that has been occupied as a residence before you bought it.

 

GST and the Real Estate Transaction

 

GST applies to most of the services provided in completing the real estate transaction.  For example, GST is applied to the commission a REALTOR® charges for facilitating a sale. The tax is paid by the person responsible for paying the commission - usually the seller. REALTOR® commissions are taxable even if the GST owed is reduced by a rebate, or the sale of the property is exempt from GST. GST applies to many other services involved in the real estate transaction, such as fees for appraisals, referrals, surveys and legal assistance.

 

GST and RENT

 

No GST is payable on residential rents. However, if you employ a REALTOR® or another professional to find and arrange a tenant for your rental property, GST applies to the fees and commissions they charge for providing this service. GST also applies to the fees charged to the landlord for the property management, as well as repair and maintenance services. Monthly fees charged by condominium associations are not subject to GST.

 

When is GST Payable?

 

GST is normally due and payable when the real estate transaction is completed. This is usually referred to as the closing or completion date. In some cases, GST could be payable on transfer of possession.

 

For additional GST information and calculation, contact your local Canada Customs and Revenue Agency office or click the following link: 

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/menu-eng.html

 

New HST Info

 

The provincial government has announced that it intends to combine the eight percent Provincial Sales Tax with the five percent federal Goods and Services Tax, creating a 13 percent Harmonized Sales Tax (HST).

• The HST is NOT YET IN EFFECT. The provincial government has indicated that it intends to bring the HST into effect beginning on July 1, 2010; however, note transition rules below.
• HST will not apply on the purchase price of re-sale homes.
• HST would apply to services such as moving cost, legal fees and home inspection fees.
• HST will apply 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. For new homes under $400,000, this would mean, on average, no additional tax amount compared to the current system.

 

 

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