Understanding HST in Real Estate

HST on New Homes

If you are purchasing a newly built home in Toronto as an investment, then there is another payment which you should include under your closing costs, which is Harmonized Sales Tax (HST). However, buyers that will be using the new home as their primary residence are exempt from paying HST on the home.

HST is a consumption tax in Canada which combines both the Goods and Services Tax (GST) as well as Provincial Sales Tax (PST), in one.

In Ontario, the HST is valued at 13% of the price of the purchased home. As such, when preparing to buy a home, pay attention if HST is included in the price or not as this makes quite a difference in the price.

For example, if a builder lists the price of a newly built home at “$300,000 incl. HST” this means that the 13% HST have already been added to the price. Whereas if the builder lists the price of a newly built home as “$300,000 + HST”, then the actual price is $300,000 + (300,000 x 13%) = 300,000 + 39,000 = $339,000

In most cases, wether resale or pre-construction, HST is in fact included in the purchase price.

New Housing HST Rebate

If your newly built home is valued at $450,000 or less before HST, and this home is going to be your primary place of residence, then you are entitled to a 5% rebate of your HST. However, you must include a Form known as “GST190” and file it with you personal income tax.

To get more information on HST, and rebates concerning HST, it is advised that you talk to a lawyer who specializes in HST rebates or an accounting firm prior to purchasing you home.

HST on Resale Homes

Resale homes, also known as previously owned homes, are HST-exempt. The price negotiated between the seller and the buyer is the actual price of the home – no need to add that 13%.

Toronto Real Estate: Buy - Rent - Invest