Tuesday, May 25, 2010

CMHC Insurance Premiums Taxable

With the impending introduction of the HST (Harmonized Sales Tax0 I had a few questions about CMHC Insurance Premiums and their own additional taxes. CMHC insurance premiums apply at the request of the Lender to provide additional comfort and security or by Legislation where a Borrower is required by the lender to provide Mortgage Insurance.

The CMHC Mortgage Loan Insurance premium is calculated as a percentage of the loan and is based on the size of your down payment. The higher the percentage of the total house price/value that you borrow, the higher percentage you will pay in insurance premiums.

Remember: without mortgage insurance you may avoid the insurance premium but you’ll typically pay much higher interest rates and additional administrative fees. At the end of the day, for the vast majority of borrowers, the cost of CMHC Mortgage Loan Insurance is more than fully offset by the savings achieved. Source

I made direct inquiries with the Ministry of Revenue; Tax Advisory Branch and was directed to a Ms. Nancy Blasiak, Tax Advisory Specialist, who very kindly answered the request for information and responded in writing with the correct tax circular and a complete definitive answer. CMHC Insurance premiums are not subject to the combined HST, they do however continue to accrue the (currently) 8% Provincial Sales Tax.

CMHC Insurance Premiums are not Subject to HST

While we are generally focused on the issues in our lives and the daily chores, delights and drama's that command our attention, I need to pay attention to the details so I can answer your questions knowledgeably. If I can be of assistance to you, in achieving your goals, give me a call.

Would you like to add a comment? Please do so below.

1 comment:

Tridac - The Mortgage Centre (#11023) said...

Hi David

Thanks for that informative post and clearing up whether HST applies to CMHC premiums. I am sure many home owners found this info useful.

I also mused about CMHC on my blog http://www.sonofabroker.com/what-is-cmhc-mortgage-insurance-good-for

Keep up the great work and posts!