HST AND NEW HOMES SALE

Posted by: dan

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By Tony Dhami

On July 1, 2010 HST will replace GST on New Home Purchases. However, there is a phase in period that must be understood in order to accurately budget for your new home.
If the date of purchase contract is on or before November 18, 2009, GST (5%) will be applied with the same exemptions as have previously been stated, regardless of completion date. If the purchase is made (contract signed) after November 18, 2009, GST (5%) will be applied ONLY if completion is before July 1, 2010. If completion occurs after July 1, 2010, HST (13%) will be applied.
All contracts signed after July 1, 2010 will be subject to HST (13%).
HST Rebates
HST is a harmonized tax comprised of GST (5%) and PST (8%). The Rebate Programs for First Time Home Buyers are computed using two different calculations for the two portions of the HST as follows:
GST rebates are at 36% of GST payable for purchases under $350,000; partial rebate between $350,000 and $450,000; and no rebate on purchases over $450,000.
The PST portion rebate is 71.43% of PST payable up to a maximum rebate of $26,250 (approximate purchase price of $525,000)
In Short
If the purchase price is under $525,000, the purchaser will effectively pay GST (with applicable rebates) plus 2% of the original purchase price (comprised of the PST).
If the purchase price is over $525,000, the purchaser will pay 13% HST less $26,250 in maximum PST rebate.

Snapshot 2010-01-08 09-53-05