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HST and real estate

Do I have to pay Tax?

The harmonized sales tax introduced by the Liberal Government in Ontario went into effect in July 2010. Although tax is collected at a rate of 13% on the sale price of good and services, it doesn’t apply to every type of home or every type or real estate.

New Home purchases are subject to HST but may qualify for an HST rebate.  Resale homes are sold without HST.  Land may be exempt from tax, but realtors and other professionals must charge HST on the purchase price.  However, if the home is going to be your primary place of residence, it may qualify for a partial HST rebate, depending on sale price.

You can get the HST Rebate application here

You do not have to pay HST on the purchase price of a used residential home.  Revenue Canada defines “used residential property” to include a previously occupied house, condominium, summer cottage, vacation property or non-commercial hobby farm.

HST applies to most of the services provided in completing the real estate transaction.  For example, 13% HST is applied to the commission a realtor charges for facilitating a sale.  The tax is paid by the person responsible for paying the commission – generally the seller.

HST also applies to many of the other services involved in the real estate transaction, including appraisal feed, referrals, surveys and legal assistance.  HST is charge on these fees regardless of whether the house purchase is itself HST exempt or not.

One exception is that mortgage broker fees are HST exempt if the fees are charged separately from any taxable real estate commissions.  As well, mortgages and interest on mortgages are HST exempt.

HST is not normally due and payable when the real estate transaction is completed – generally the “closing date”.  In some cases, HST could be payable on transfer of possession.  Your realtor can answer your questions about closing dates and HST payments.  For additional information contact you local Revenue Canada Tax Services Office.