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Confused about HST

Hope this explaination helps

Proposed Changes for New Housing Rebate
HST will apply to the purchase price of newly constructed homes. Originally, the provincial government indicated that it would provide a rebate to ensure that, on average, new homes under $400,000 would not be subject to an additional tax burden. Homes priced between $400,000 and $500,000 would be eligible for a portion of the rebate, and homes priced above $500,000 would be subject to the full HST. However, the provincial government is proposing some significant enhancements to these rebates, as follows:
• Enhanced new housing rebate - The province is proposing to enhance the new housing 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.
• New rental housing rebate - Similar to the enhanced new housing rebate, the province is proposing a rebate for new residential rental properties. This proposed rebate would support affordable rental housing across Ontario.

Proposed Transitional Rules for New Housing
The province is also proposing transitional rules for new housing. Generally, as part of the transitional rules, sales of new homes under written agreements of purchase and sale entered into on or before June 18, 2009 would not be subject to the provincial portion of the single sales tax, even if both ownership and possession are transferred on or after July 1, 2010. The tax would also not apply to sales of new homes under written agreements of purchase and sale entered into after June 18, 2009 where ownership or possession is transferred before July 1, 2010.

More Detail
Additional detail on the proposed enhancements to the new housing rebate, rental housing rebate, and new housing transition rules is available from the Provincial Government http://www.rev.gov.on.ca/english/notices/str/02.html
 
So say for example if I bought a $390,000 pre-construction condo unit today and the occupany date is mid to late 2010. Would I qualify to get the $24,000 rebate
Click to expand...

So, short answer: yes (although you'd also have to pay the tax, so you basically end up paying 2% in tax that should hopefully be compensated by a price that's 2% lower, so you should come out even).
 
Hank... how do you arrive at 'compensated by a prices that's 2% lower'?

From what I gather in sup2009 above:

  • houses less than $400,000, after July 1 2010, you still only pay 5%
  • houses more than $400,000, after July 1 2010, you will pay 5%+8%, but will get 3/4 of the 8% back through rebates, essentially you pay 5%+2% tax

Does anyone understand how this HST work to confirm my intrepretation?
 
Hank... how do you arrive at 'compensated by a prices that's 2% lower'?

From what I gather in sup2009 above:

houses less than $400,000, after July 1 2010, you still only pay 5%
houses more than $400,000, after July 1 2010, you will pay 5%+8%, but will get 3/4 of the 8% back through rebates, essentially you pay 5%+2% tax
Click to expand...

You're paying the full 5%+8% on your house price no matter whether it's over or under $400,000, but you get a 75% rebate of the 8% (so 6%) for the amount of the price up to $400,000. The effect of this is that you pay 7% up to $400,000 and 13% over $400,000.

The reason that you should still be coming out even (despite the fact that you're paying an extra 2% on prices lower than $400,000) is because house builders can now claim input tax credits on the PST part of the HST and it's been said that there was about 2% PST built into house prices before the PST-GST merger, so builders will now be able to claim input credits for that 2% which will lower their costs by 2%. The assumption is that they'll pass on this 2% savings to the consumer, so you'll get a 2% reduction in prices. That's why the blurb above says that "For new homes under $400,000, this would mean, on average, no additional tax amount compared to the current system."
 
Solaris said:
Hank... how do you arrive at 'compensated by a prices that's 2% lower'?

From what I gather in sup2009 above:

  • houses less than $400,000, after July 1 2010, you still only pay 5%
  • houses more than $400,000, after July 1 2010, you will pay 5%+8%, but will get 3/4 of the 8% back through rebates, essentially you pay 5%+2% tax

Does anyone understand how this HST work to confirm my intrepretation?
Click to expand...

Just wondering...often builders will absorb the 5 % in the price....and in such cases...the rebates usually go back to the builder. How do we know if the builder absorbed the tax percentage in the price?
 
Imti said:
Just wondering...often builders will absorb the 5 % in the price....and in such cases...the rebates usually go back to the builder. How do we know if the builder absorbed the tax percentage in the price?
Click to expand...

The builder doesn't absorb 5% of the tax. It's built into the price when you buy it. Builders don't absorb anything for you. They are there to make money. If they are charged a fee for anything, it will be passed onto the buyers.
 
I came across something interesting.

For condominiums, the builder will be required to pay a transitional tax adjustment of 2% of the total purchase price, as established for GST purposes, of the condominium unit or building, as applicable. However, the builder may be entitled to an RST transitional housing rebate.
Click to expand...

http://www.kpmg.ca/en/services/tax/tnf/tnfc0920.html

So builders will be giving purchasers a 2% rebate for the PST portion. Essentially, only housing above 400k will require to pay more. I guess it isn't too bad.
 
Can I confirm whether the HST will impact my situation:

- Purchased a pre-construction condo unit for under $400K in North York in April 2007.
- Tentative occupancy date is April 2010 but from what I can tell it's likely to be delayed to about September/October 2010.

Thanks in advance.
 
TheProfessor said:
Can I confirm whether the HST will impact my situation:

- Purchased a pre-construction condo unit for under $400K in North York in April 2007.
- Tentative occupancy date is April 2010 but from what I can tell it's likely to be delayed to about September/October 2010.

Thanks in advance.
Click to expand...

If you signed agreement before June 18, 2009. You don't have to pay HST
 
AKS said:
If you signed agreement before June 18, 2009. You don't have to pay HST
Click to expand...

Just to be clear. If I bought a condo at Aura, pre-construction, in 2008, for OVER $400,000.
I won't have to pay the extra HST, even though the closing/mortgage won't happen until it is built in 2012 or 2013. Correct?
 
I'm confused about how the purchase cost of my home was determined back in Aug '10. When I got my final itemized list from my Lawyer the purchase price was $460K. I know I paid the builder $437K. Would the difference be due to rebates from HST?
 
BrianSolo said:
Just to be clear. If I bought a condo at Aura, pre-construction, in 2008, for OVER $400,000.
I won't have to pay the extra HST, even though the closing/mortgage won't happen until it is built in 2012 or 2013. Correct?
Click to expand...

Yes, you don't need to pay HST.
 
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