Thursday, March 26, 2009

Perfect Timing for Harmonized Tax Implementation

Well, it seems to be official. The Ontario Government has decided to harmonize the Provincial and Federal Sales Taxes.  July 01st, 2010 the tax Kicks in.

Stephen  Dupuis, president of the Building Industry and Land Development Association, pointed out that buyers of new homes would be hit particularly hard if Ontario harmonized the PST with the federal GST. See previous Posting 

On a $350,000 new home, he wrote that the consumer would have to pay an additional $17,920. But it's not just buyers of new homes who would be affected by a merging of the two taxes. Buyers and sellers of resale homes would also be hurt because a harmonized tax would apply to many services that are currently exempt from PST – including legal fees, real estate agent commission, renovation services, land survey reports, home inspections, landscaping and house cleaning services. Also affected would be the cost of labour for installations or repairs, including additions, kitchen renovations, driveways, roads, fences, swimming pools and patios. 

Assuming no change in the provincial sales tax rates, the seller of a $350,000 resale home would get hit with an additional $1,400 in tax on a real estate agent's 5 per cent commission, plus a new 8 per cent provincial tax on moving expenses, legal fees, accounting and bookkeeping fees, renovations, painting and other services which are currently exempt.

Ken Gaudet from the Canadian Taxpayers Federation is quoted as saying that according to their understanding, the Provincial Sales Tax will now permit the (additional) taxing of Gasoline.

So what will happen to buyers looking at a $ 350,000 property, condo or house, with their downpayment of 5%. Their current downpayment is $17,500.00.  As the tax would be applied to all construction, and CMHC fees, lawyers, title Insurance and including movers, Buyers could see a tax bill payable on their Mortgage Insurance fee Increase from  $865 to $1405. This brings the total closing costs on a resale home in the City of Toronto (combined with the Miller Bite) to a total of $8,870.00. (Ontario LTT $3725  Toronto Land Tax $2,200.) *Assumes that LTT rebates may not be available.

Now your total downpayment requirement is really $26,300.00

Let's get you purchased or sold prior to the implementation of the tax to make your dollars go further.Take advantage of the low interest rates!

Your comments are always invited. 

1 comment:

bakar said...

Making a Big List

You need a list, not just before, but one that will be used all the way to the end. Start off with estimating the amount of packaging materials that you will be needing and write this down creating a shopping list of sorts. Once you have your packaging, use this list to keep track of the boxes. Stuff will et miss placed, but knowing what is what makes finding it a lot easier. Assign a color to every room of the house, and all the boxes that are packed in that room get the color plus a number and the contests will need to be placed on your list so that you can find them later.

Getting your Supplies and Packing ahead of Time

You have to make sue that you have plenty of packaging supplies. It is always better to make sure that you have more then you need rather then less or otherwise you will have to run out at the last minute trying to find more. If you have extra materials, these can be used to safeguard and separate the larger appliances and furniture from being damaged while in transport. Make sure that you are packing ahead of time as well. Start off by placing the boxes into each room and packing up the least used items to the most used. As you empty out drawer or closet, color number the box and write it down on the list for later.

Keep you Things Together

This one is important and too many people fail to do it. If you are packing up bookends, do not place them in separate boxes to maximize the use of the box or it will be harder to find them later. If you made sure to have many different sized boxes, then you will be able to select the right box for the items you are packing. When you try to fit something in one box and it does not fit, do not move it to another box unless like items are also going with it. Most importantly though, do not mark on a box until you are ready to tape it shut. Having multiple marks on a box can make finding stuff very difficult.

Use your Personal Luggage

Suitcases and backpacks, we all have them and they can hold a lot of stuff. If you have placed all the least used items into boxes and sealed those up, then suitcases and backpacks are perfect for commonly used stuff. You will also want to keep valuable papers and other stuff close on hand which is why you should use your luggage for storing these as well.

Room for the Moving Truck

Make sure that when the moving truck arrives at your home, they have some place accessible to park. You obviously do not want them parking across the street or even in the yard when they arrive unless it is absolutely necessary. If it is possible, keep the driveway clear for them so they can back right up to the garage and move everything out of the house that way. If you plan on doing it this way, then it might even be helpful and save you some money if you move all of your boxes into the garage so they can load the truck quicker; remember, first box on will be the last one off.