New Home Sales Tax To Increase 8%

[Ken]

Please let me know if I were wrong. If the HST is implemented, basic goods like raw meat, veggie, $3.99 or less meals, baby foods & clothings, tampons, 6 or more donuts will be taxed. That doesn't help the poor...

I still don't see that average Ontarians will benefit from this.

 

[TKTKTK]

It depends where you purchase in Toronto though. If your budget is in and around 400K, then perhaps you have to consider living near the outskirts of downtown Toronto. I really don't think it will make a negative impact. If the taxes applied to 300K and over, that would be crossing the line in the sand.

300K + up would be, like, nearly every non-studio property in the city. When was the last time you priced real-estate? 98?

We're supposed to be encouraging intensification downtown, not giving people more reasons to decamp to suburbs.

 

[confusion]

Please let me know if I were wrong. If the HST is implemented, basic goods like raw meat, veggie, $3.99 or less meals, baby foods & clothings, tampons, 6 or more donuts will be taxed. That doesn't help the poor...

I still don't see that average Ontarians will benefit from this.

It would seem like that, but currently they are saying that previous items that were tax exempt under the PST would also be tax exempt under the HST. So actually, on those basic goods there will be a reduction of the GST.

The only real issue with the harmonization of the taxes is precisely what this thread is about, it will cause an increase on taxes for new homes over 400k and existing homes above 400k.

 

[Josef]

I think this is good news.

The poor are spared, and the middle class and the rich pay equally.

Stop thinking in terms of me, me, me, and start thinking about what is best for the province and for other Canadians.

Yes, I hate paying taxes too, but I look at the bigger picture. The government needs money. Come up with the money now, or have future generations pay the interest.

Exactly.

 

[nfitz]

Surely an 8% price increase is an exageration. The prices of all the materials in the construction previously would have had a 8% sales tax on them that was passed on. Given the contractor can now claim this 8% as in input tax credit that is reduced from the additional 8% HST that is now charged on the sale, then the total increase is going to be less than 8%.

And for sales less than the $400,000 (?) cut-off, the contractor will still be able to claim an input tax credit - so shouldn't this lead to a drop in house prices - for those new houses below $400,000?

I'd think a much bigger issue than this, is that I don't see any changes in fuel tax - which means that gasoline at the pump will be going up about 8¢ a litre (assuming the price at the pump is $1)

 

[Roy G Biv]

Any word as to whether those of us who purchase prior to June, 2010 but who close after this date will be grandfathered. There will be hundreds of people who purchased a condo in excess of these amounts in 2007 or 2008 who expect to close in 2010 or 2011. Will we have to pay the new tax?

I'd like to know this as well.

I think this is good news.

The poor are spared, and the middle class and the rich pay equally.

Stop thinking in terms of me, me, me, and start thinking about what is best for the province and for other Canadians.

Yes, I hate paying taxes too, but I look at the bigger picture. The government needs money. Come up with the money now, or have future generations pay the interest.

I think the issue is how dramatically it will affect Toronto real estate. 5% -----> 13% is huge. And add the Land Transfer Tax.

Raising taxes during a recession makes little sense.

 

[Johnzz]

Any word as to whether those of us who purchase prior to June, 2010 but who close after this date will be grandfathered. There will be hundreds of people who purchased a condo in excess of these amounts in 2007 or 2008 who expect to close in 2010 or 2011. Will we have to pay the new tax?

My lawyer said any purchase BEFORE July 2010 is only subject to the 5% GST (regardless of when it's built). Any purchase after this date will face the new 13% sales tax.

I suppose this will artificially boost new housing demand ahead of next July, similar to the pop in demand ahead of last years increased land transfer tax.

 

[lordmandeep]

I am confused how on earth any you should be worried about buying a condo over 400k...

 

[mb15]

I completely disagree with Josef's views. Josef, as has been discussed already, $400,000 is not a lot of money at all for a home in Toronto. The government should be trying to intensify the downtown core and not push people into the suburbs.

Also, Josef, have you ever considered what will happen to the people who had very little equity in their homes? The increase in taxes is simply going to push home prices down by that same amount. That being said, if somebody only had let's say 10% equity in their home and home prices now decline by 8% (effectively the tax), then their equity is virtually wiped out. Josef, who are the people who generally do not put large portions of equity in their homes? Low Income people. So in effect, this will not be better off for low income families as what little money they had as equity will be gone.

 

[nfitz]

I completely disagree with Josef's views. Josef, as has been discussed already, $400,000 is not a lot of money at all for a home in Toronto.

Then buy a used home - like most of us do.

 

[cdr108]

I completely disagree with Josef's views. Josef, as has been discussed already, $400,000 is not a lot of money at all for a home in Toronto. The government should be trying to intensify the downtown core and not push people into the suburbs.

Also, Josef, have you ever considered what will happen to the people who had very little equity in their homes? The increase in taxes is simply going to push home prices down by that same amount. That being said, if somebody only had let's say 10% equity in their home and home prices now decline by 8% (effectively the tax), then their equity is virtually wiped out. Josef, who are the people who generally do not put large portions of equity in their homes? Low Income people. So in effect, this will not be better off for low income families as what little money they had as equity will be gone.

Then they shouldn't have bought with less than 20% down.

Mostly RE industry and financial institutions advocated that fallicy to their benefits.

 

[mb15]

I completely agree with you, but the facts are that a lot of people do buy with less than 20% down.

nfitz - The tax applies to old and new houses.

 

[nfitz]

nfitz - The tax applies to old and new houses.

No it doesn't - the HST is only on new houses (condos, etc.) not resales - the government was quite clear on that. The budget clearly says "Resale homes would not be subject to the single sales tax."

 

[lordmandeep]

I know if it was on everything,

I would have been supporting the Tories now....

 

[TOBoy]

I am just concerned about the negative effect the tax has on trying to get small families to live downtown. It will be a welcome addition to downtown where it can be a place for not just young professionals or retirees. Most of us want to see larger condo units where a couple with a kid will be able to live comfortably. For that, you'll looking at a unit over $400K for sure. With the tax, it will be at least $32K more. For that kind of money, maybe it's better to consider places like Vaughn where they can have a bigger house with a large backyard.