Markham Boxgrove Real Estate Blog

Helping Buyers and Sellers real estate needs in Markham's Boxgrove and Morningside Heights communities

HST (TAX)- What Sellers Need to Know today!

April 8, 2010 by 1stoprealestate.ca

I just finished writing the blog and my computer froze… I should have known better to write straight in the blog program without saving it.  Anyways… having vented, let me tell you how HST will affect Sellers of Real Estate and in another post I’ll mention the affects on Buyers.

So What is HST? – 13% Tax (Harmonizing of GST (5%) and PST (8%) – hence HST

When does it take affect? – July 1st, 2010

HST will apply on all current services you pay GST on.  So you will pay on Realtor commissions, Lawyer fees, Inspections, Maintenance, Moving Costs, etc.

Transitional Rules:

1.  If you list May 1st and close July 5th.  As long as 90% of the services related to your Real Estate transaction (open houses, getting mortgages, inspections, title search, etc.) occured prior to July 1st… then you won’t have to pay HST just the GST.

2.  If you list May 1st and close Aug 1st.  Since the 90% rule won’t apply you will now pay on a weighted scale.  2 months (2/3) GST and 1 month (1/3) of HST on all your closing cost (commission, lawyer fees, etc.).  All costs incurred prior to July 1st would only have incurred GST.  Movers would have charged entire HST.

How much will you be paying extra?

Lets calculate using an average GTA price of $400,000 for a single family house.

Seller would pay: 
1.  Commission 3.5% – 5% = $1120 to $1600 more
2.  Lawyer ($1000 – $2000) = $80- $160 more
3.  Moving ($1000-$2000)=  $80 – $160 more
4.  Pre-inspection ($300-$500) = up to $40 more

So Sellers are looking at around $2000 added to closing costs.  Nothing too significant that will cause a dent in the Toronto market.  The Toronto Land Transfer Tax was significantly more expensive and had no affect.  I think surrounding municipalities will probably add their own form on Land Transfer Tax in the upcoming 3-5 years.

In my next post I will talk about how GST affects  Buyers.

Jas Jagpal, Remax Real Estate Consultant – 647-272-6629  jasjagpal@rogers.com

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Immigration's affect on the Housing Market.

Immigration's affect on the Housing Market.
 
Since 1999 – 2008, each year about 250,000 people migrate to Canada from all over the world.  The vast majority of them land in the Vancouver, Montreal and the GTA region.  In 2008 – 37,375 in Vancouver, 38,884 in Montreal and 86,929 in Toronto.  In fact in some years Toronto has taken in up to 125,000 new immigrants.
 
What does this mean?  Well each year about 100,000 migrants need a place to live.  Look around and you’ll see cranes hovering in the skyline building newer and newer condominiums.  Go into the suburbs and once where there were farms are now housing developments and large shopping malls.
 
Will this ever stop?  I don’t think so!  As long as half the immigrants choose to call Toronto their home, the market for new homes and condos will grow.
 
The fuel required to keep this engine running and maintaining current market trends is EMPLOYMENT!  Governments must have plans to ensure job growth in all sectors.  Low interest rates, help affordability, but jobs keep people in their houses.
 
In the next 12 months, I believe even with the rising interest rates and the onset of the Harmonized Sales Tax HST… there will be positive growth- but not the double-digit gains we had the past 12 months.  I’d be more concerned with the effects of a higher dollar hurting exports and job creation than the HST and rising interest rates.
 
What do you think will happen in the housing market in the next 6-12 months?
 
Jas Jagpal, jasjagpal@rogers.com ; 647-272-6629
Remax Dynasty Realty Inc. – www.1stoprealestate.ca