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On July 1, 2010 the new Harmonized Sales Tax will take effect in Ontario. Previously all services paid by Ontario consumers were taxed at the 5% GST rate only. The 8% Ontario provincial sales tax applied to goods and not services but all this will change on July 1st. The new HST will combine the 8% provincial sales tax and the 5% GST for a total 13% sales tax and will apply not only to all goods but all services as well.
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What does this mean for current condominium owners in Toronto? While condo maintenance fees themselves are not subject to GST, PST or HST, many of the services that make up condo fees such as hydro, natural gas, repairs, and landscaping will now be taxed at 13%. Therefore the maintenance fees will have to increase to cover this additional tax on the cost of services to the condominium. Industry experts suggest that the HST will result in condo fees rising an average of 6 to 7% depending on the building.
What does it mean for those who are considering buying a condominium in Toronto? The HST will not apply to the purchase of RESALE condominiums but will apply to the purchase of NEW condominium units. If buyers of new condominiums take possession of their unit after July 1, 2010 the 13% HST will apply.
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GST-taxable before July 1, 2010
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RST-taxable before July 1, 2010
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Is there a change to the amount of tax payable under the HST?
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New Homes up to $400,000
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5%
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No RST
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No change*
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New Homes over $400,000
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5%
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No RST
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Yes**
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Resale Homes
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No GST
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No RST
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No HST
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Real Estate Commissions
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5%
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No RST
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Yes: changes to 13%
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*The new housing rebate will be 75% of the Ontario component of the HST, up to a maximum of $24,000. The rebate will ensure that buyers of homes priced up to $400,000 will, on average, pay no more tax than under the RST system. However, applicable RST on building supplies is embedded in the price of the home.
**New homes purchased as primary residences valued at $400,000 or more will be eligible for the maximum new housing rebate of $24,000.
