The long predicted rush to beat the HST seems to be in full effect. Developers who have nearly finished buildings are rushing to get their remaining inventory over $400K sold and closed (building registered) before June 30th. For example, Empire Communities has School House Lofts in the Annex – a boutique collection of high-end condominium residences, all priced over $629K, and they are trying to get these units sold and the building registered by June 30th. If they do not, they will either have to absorb a MASSIVE hit from the inclusion of the 8% extra HST, or they will have to raise prices on all units much.
On the resale side, buyers and sellers alike are trying to get their closings in before June 30th even even if the impact will not be nearly as fantastic as on the new build side. Let’s just say that all the real estate lawyers in the city will be VERY busy the last week of June and completely bored the first week of July!
Here’s what the actual impact of the HST will look like for both buyers and sellers of a typical $400K transaction
For Sellers, finishing before July 1st will save you 8% on your real estate fees (high and mighty fees at 5%, that’s $1600). Legal fees on a typical sale will be about $1000 (HST would be $80 extra here).
For Buyers, finishing before July 1st will save you 8% on your legal fees (high and mighty fees at $1500, that’s $120).
Other miscellaneous expenses to reckon about that will cost more come July 1st include home inspections and moving expenses.
Tip For Buyers: If you are buying a condo, check the status certificate to ensure that the budget includes an accounting for the HST and the impact it will have on the services the condo uses regularly. If the condo board has not plotted for the increase, this is not a excellent sign!
Tip For Buyers and Sellers: Secure your lawyer ahead of schedule to handle your finishing as many will be ˜booked up for the last week of June and may turn down you service.
Why the HST
Ontario’s comprehensive tax package, including the harmonized sales tax, will make jobs by making Ontario more competitive and provide personal tax relief.
The world has changed. We’ve witnessed the largest global economic dip in 80 years. If we want Ontario to wait strong, we must change too.
We need to be more competitive. We need to attract more investment and jobs. We need to protect those vital services like health care and culture we’ve worked so hard to build.
Many economists and businesses agree that a single value-added tax, like the HST, is the most vital thing we can do to strengthen Ontario’s economy.
We have a choice: we can turn down to fix what’s kaput, resign ourselves to the thought that Ontario will be less competitive, and watch our province go backward. Or we can go forward, embrace change and hold firm to the conviction that Ontario can emerge through this stronger than ever before.
How it facility
The fact is, Ontario’s former sales tax structure — that included the provincial sales tax (PST) — hurt job creation.
The PST was charged on many buys made by businesses in manufacturing commodities and providing services. It penalized businesses by taxing them at every step in the production, distribution and retail processes — making the PST a tax on a tax on a tax.
With the PST, about $4.5 billion in embedded sales tax was hidden in the cost of doing business in Ontario. It drove up costs to consumers and placed Ontario’s businesses at a competitive drawback. Most countries we compete with for jobs don’t have that drawback.
The HST generally removes this hidden tax by refunding sales taxes paid on most business inputs. These refunds will mean lower prices for many consumer buys and lower business costs, which experts agree will improve the competitiveness of Ontario businesses and result in increased business investment, leading to more jobs and higher incomes.
