If you’re wondering how Ontario’s planned Harmonized Sales Tax will affect real estate transactions and home ownership in London, I hope the following information will help.

In its 2009 Budget, the Government of Ontario proposed a single value-added Harmonized Sales Tax (HST) to replace the existing Goods and Services Tax (federal GST) and Provincial Sales Tax (PST), effective July 1, 2010.

The HST rate would be 13% (with some exceptions that apply more to business than consumers). Of the 13% HST, the provincial portion would be 8% and the federal portion 5%. The HST would be administered by the federal government.

So how will we be affected?

For starters, real estate buyers and sellers will pay 13% (8% more) on legal fees, appraisals, real estate commissions, home inspection fees and moving costs.

All of us will pay HST on utility bills, including gas, electricity, water and home heating fuel. The increased tax will also apply to labour on home renovations, cleaning services, lawn maintenance, landscaping, snow removal, etc. And, this does not include a whole host of other products and services previously exempt from PST that will now become eligible for taxation at the HST rate.

The HST will not apply to purchases of resale homes.

The HST will apply to purchases of new homes. However, new homes priced up to $400,000 that are purchased as primary residences may be eligible for rebates up to a maximum of $24,000.

For more information about the Harmonized Sales Tax in Ontario, you can visit http://www.rev.gov.on.ca/en/taxchange/index.html

budloughin@royallepage.ca