Starting July 1, 2010 Ontarians can expect to pay a harmonized sales tax (HST) rate of 13% on a long list goods and services that were previously exempt from the 8% Provincial Sales Tax (PST). While the impact of the tax will be felt by all Ontarians, the province’s 3 million homeowners and the thousands who buy and sell a home every year will be hit particularly hard by this latest tax grab.
There are going to be a lot of very surprised people on July 1, 2010. It's a massive tax increase.
So here's the bad news: Although resale houses will not be taxed, everything to do with the sale will be -- the house inspection, the agent's commission, the moving costs and legal fees.
There will even be tax on the home energy audit all sellers are now compelled to carry out thanks to the Green Energy Act the McGuinty government passed in May. And speaking of the home energy audit, why isn't anyone angry about that?
Altogether, that means the extra tax on a resale house priced at $369,000 will come in at roughly $2,000 (largely the tax on the agent's commission) and double that and more on many ordinary houses in Toronto, before you even remember you have to pay Mayor David Miller's onerous land-transfer tax, too.
It's enough to make you wonder exactly why you're thinking of moving. Or to get you packing your bags and calling the mover today.But it's worse news for new home buyers, although not as bad as it was originally expected to be.
KICKS IN AT $400,000
Under pressure from groups like the Ontario Home Builders Association, the province has decided not to levy the tax on the first $400,000 of any new home purchase.
(GST has been payable for a number of years but builders tend to hide it in the house price.)
So on a $500,000 house, the extra HST hit will be $6,000 instead of $30,000 (builders get a 2% tax credit that lowers the overall tax hit from 8% to 6%).
Without that change, the loss of a potential 21,200 jobs in the GTA alone looked probable.
Ouch. That's enough to scare off first-time home buyers and potentially many other people struggling to make ends meet. In British Columbia, the looming HST has caused public outrage. Thousands have attended anti-tax rallies and protested at the top of their lungs. But in Ontario, nothing. We've been a bunch of sheep.
Where is the anger? Where is the outrage? Why aren't people screaming?
Easy, according to the OREA's Flood: "There's a lot of ignorance. I don't think the average consumer is even aware of the tax."
So wake up, Ontario. The HST will impact many things you haven't even thought of yet -- but the housing-related taxes are killers.
Collar your MPP. Complain to the premier. Organize some anti-HST rallies like the ones they've been having in B. C.
And if you're looking for a nice home in the country, I know where you can find one.
How the new tax will affect a home sale and purchase:
* Mortgage insurance $470
* Legal costs $80
* Commission $1,150- $1,700
* Home Inspection $32
* Title Insurance $15
* Total $1,747 - $2,297 in extra taxes
*(Estimates based on house less than $400,000, from Ontario Real Estate Association)
Help oppose this latest tax grab. Here are links that will make it easy for you to write to your MPP and tell them that Ontarians do not need higher taxes on homeownership.
Send an e-mail to your MPP on this issue now by clicking here.
Or sign an Online Petition by clicking here.
Should you receive a response from your MPP, please forward a copy to [email protected] or via fax: (416) 445-2644 to the attention of the Government Relations Department.
Thank you for your help.
