Homelife Victory

Homelife Victory would like to congratulate and welcome the following salespeople to our family:  Frank Diecidue, Billha Daniel, Shawn Gardener, Alirezah Gheisari, Padmanab Merchant, Paul Helps,  Amrit Punjabi, Hanieh Vedadi, Ali Dabiri, Christina Vlahakis, Dimitri Fleitman, Sousan Zokaei, Arash Sajadikaboudi, Veronica Orlova, Segey Orlov, and Hossein Nakhsaz.  We wish you all success and look forward to working with you and watching you grow.



How the Ontario HST Will Impact You in 2010


By Randy Selzer


The Ontario Government recently enacted legislation which will implement the much-dreaded HST Tax. This new tax will take effect on July 1, 2010. The HST tax will effectively combine the Provincial Sales Tax of 8% percent with the Federal GST Tax of 5% percent, to create a new "harmonized" total tax of 13% percent. This new tax will be applicable to many real estate services which hitherto only had one or the other tax applied. The HST will result in a 13% tax on new home construction, but my post today will concern those ancillary costs pertaining to the buying and selling of resale residential real estate properties in Ontario ...

First, the good news....there is no HST tax payable on the sale of a resale home (residential). So the single largest dollar amount exchanged is not taxable under HST.

However, under the harmonized sales tax (HST), home buyers and sellers will have to pay extra tax on a range of services associated with the real estate transaction: services such as legal fees, moving costs, real estate commissions and home inspection fees. Currently, consumers only pay the 5% Goods and Services Tax (GST) on these services.

In a nutshell, after July 1, 2010, if you are a seller, there will be a 13% percent tax payable on the real estate commission you pay - currently there is only the 5% percent GST payable on this fee. Your lawyer's fee will also be subject to the 13% percent HST, as will the cost of a Condominium Status Certificate.

If you are a buyer, any Home Inspection you pay for will be subject to the 13% percent HST. And so will the cost of movers hired. In addition, the cost of the CMHC premium for "high-ratio" mortgages has traditionally been taxable for PST - this amount will now be taxable for the full 13% percent HST.

So one can see that, with the introduction of the HST, whether you are buying or selling a Resale Home in Ontario , costs will be going up.

A press release from the Ontario Real Estate Association earlier this year summarized some of these changes which will take place - the example that they used was for a resale house priced at $360,000, and it was determined that the HST would add over two thousand dollars in new taxes to closing costs. Please note, these taxes are in addition to the Land Transfer Taxes which exist for both the Province and the City of Toronto . OREA calculated that, in total, the HST would add $313 million annually in new taxes to resale home transactions.

CURRENT TAXES PAID, VERSUS THE NEW COMBINED HST TAX PAYABLE, ON A HYPOTHETICAL $360,000 REAL ESTATE TRANSACTION:

  Current Tax New Tax Total HST Payable
Mortgage Insurance Premiums(1) $752.40 $470.25(2) $1,222.65
Legal Costs $50.00 $80.00 $130.00
Real Estate Commission(3) $900.00 $1,440.00 $2,340.00
Home Inspection $20.00 $32.00 $52.00
Title Insurance $24.00 $15.00 $39.00
Total New Tax:     $2,037.25

(1) CMHC premium of 2.75% for mortgage with a 5% down payment on a $300,000+ home.

(2) Consumers currently pay the 8% PST on mortgage insurance premiums.

(3) Real estate commissions are negotiable - 5% used in this example.

(4) Ministry of Finance, Public Accounts, 2007/2008.

(5) Altus Group, "Economic Impact of MLS(R) Home Sales," June 12, 2007.

The HST Ontario Tax will add to the cost of buying and selling a resale home. Many market watchers are predicting a flurry of activity leading up to the July 1, 2010 implementation date, as buyers and sellers both try to avoid paying the tax.



GTA REALTORS® REPORTING JANUARY MID-MONTH HOUSING STATISTICS

TORONTO, January 18, 2010- Greater Toronto REALTORS® reported 1,749 existing home sales on the Multiple Listing Service (MLS®) during the first two weeks of January. This result was almost double the 888 sales reported for the same period in 2009, when sales had dipped to a recessionary low.

“We have had a strong start to 2010,” said Toronto Real Estate Board President Tom Lebour. “Widespread sales growth in terms of geography and housing type indicates that many households remain confident in their ability to purchase and pay for a home over the long-term.”

The average price for transactions in the first two weeks of January was $395,307, compared to an average of $332,495 for the same period in 2009.

“Double-digit average annual price growth will continue through the first quarter of 2010 as sales remain high relative to listings and we continue to make comparisons to last year’s winter downturn,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

 

 

 

Summary Of January Sales And Average Price


 2010 2009

   

Sales Average Price Sales Average Price
City of Toronto (416) 708 $401,120 6369 $350,835
Rest of GTA (905) 1,041 $391,353 519 $319,455
GTA 1,749 $395,307 888 $332,495

 

Source: Toronto Real Estate Board