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.