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Financing, Mortgages and Insurance What options are best for you and your situation?


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  #121  
Old 2009-07-09, 09:16 AM
YukonA180 YukonA180 is offline
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Default New tune on harmonized sales tax

New tune on harmonized sales tax .. GREAT READ//

I know I have not had anything good to say about the harmonized sales tax since the concept was first sprung on us earlier this year but frankly there wasn't much good to say about it, at least not until last week when the Province announced a dramatically different approach to taxing new homes which will result in some very sizeable reductions in the quantum of the tax increase.

To refresh your memories, on Budget day, March 26, the Province protected homebuyers of under $400,000 product by instituting a 75 per cent tax rebate (versus the federal GST new housing rebate of 36 per cent), which, combined with input tax credits, ensured that homebuyers would pay no more or less tax than previously.

As pleased as we were with the generous rebate and higher thresholds ($400,000 - $500,000 versus $350,000 - $450,000 under the GST), we couldn't help but express our concern that the impact of the HST on new homes over $400,000 would have a very deleterious impact on housing affordability and residential construction employment.

The problem with the $400,000 - $500,000 threshold range is that it was far too low for the Greater GTA where nearly half of all new homes and condos cost more than that. As well, the rapid claw-back of the HST rebate (to zero on homes over $500,000) resulted in the creation of a "wall of tax" through that price range as the tax payable escalated from $8,000 on a $400,000 home up to $40,000 on a $500,000 home, excluding input tax credits.

Progressive approach

On June 18, the provincial government announced that it was moving to a progressive tax structure (similar to income and land transfer tax) under which the full HST will be charged on the amount of the purchase price over $400,000 instead of on the entire purchase price.

The progressive tax structure dramatically reduces the quantum of the tax increase. For example, the HST on a $500,000 home drops from $40,000 down to $16,000, and when input tax credits are taken into account, the impact drops from $30,000 down to $6,000, a much more palatable amount from the standpoint of housing affordability.

The move to a progressive tax structure is clearly intended to benefit new homebuyers as the ultimate taxpayers. As BILD Chair Leith Moore stated, "We said from the outset that we were not opposed to harmonization, however we also made the point that housing is different, a fact the Province acknowledged on budget day and has underscored with these amendments to the tax structure."

Buyers win

According to Ontario Home Builders' Association president Frank Giannone, "new homebuyers from across Ontario are the winners in this decision. The adjustment to the tax structure is very positive news for homebuyers and for the 365,000 jobs that residential construction supports across Ontario."

"A new home is often the single largest investment that an Ontario citizen will ever make therefore tax policy should distinguish new housing from other consumer products. We applaud the Provincial government for demonstrating leadership to ensure that tax policy is supportive of broader provincial policy objectives including the provincial growth plan, intensification, promoting home ownership and energy conservation efforts," Giannone added.

http://www.newhomes.org/articles_sun...009.asp?id=758
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  #122  
Old 2009-07-09, 03:51 PM
oakvillehomeowner oakvillehomeowner is offline
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Quote:
Originally Posted by YukonA180 View Post

Buyers win

According to Ontario Home Builders' Association president Frank Giannone, "new homebuyers from across Ontario are the winners in this decision. The adjustment to the tax structure is very positive news for homebuyers and for the 365,000 jobs that residential construction supports across Ontario."
It is indeed an adjustment to the tax structure. Less revenue from homebuyers means they'll need to collect more from income taxes. Sure you'll save some hst when you buy a new house, but you'll pay for that for a long time in either higher income taxes or missed opportunities for income tax cuts.

Of course the real winner here is the homebuilder lobby, and in part, the newspapers themselves. These articles are happily published by the newspapers as home builders and car dealers are their biggest advertisers.
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  #123  
Old 2009-07-09, 04:28 PM
YukonA180 YukonA180 is offline
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however, I can assure you that the offsetting taxes will be shared by all ontario residents, living in old or new or rental homes in Ontario. Why would this be only me, the poor soul and a newer home buyer, especially all at once as a closing costs.

taxes are a part of a social and modern society and I am not arguing this. It should be wide spread not just on one class vs. other..
I don't care, if i missed a $100 per year of tax cut. Becoz the cut was spread over all masses, not just for new house owners.. This whole rule was a garbage by isolating new home industry.

Last edited by YukonA180; 2009-07-09 at 04:30 PM.
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  #124  
Old 2009-08-07, 02:41 PM
pidrilo pidrilo is offline
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Default talk to your lawyer?

Trying to figure out what i would have to pay on closing day if i was to buy a new home now.. the information in this thread is helpful, but i always look for the official word. So i called several lawyers in the Ottawa area, which were recommended on this forum. No one HAD ANY idea. The best answer i got was HST=13% .. Great thanks buddy! Should i pay you now or later?


If you are dealing with a lawyer who is more up to date with the industry and has a bit of experience with HST, can you please PM me the info. Doesn't haev to be in Ottawa...

thanks
Pidrilo!
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  #125  
Old 2009-08-12, 08:11 AM
barryst barryst is offline
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So is it still if i'm under $400,00, im generally safe, no matter when my closing is ? (June 17, 2010 but im expecting delays).
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  #126  
Old 2009-08-14, 04:48 PM
tommyle tommyle is offline
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It depends on the builder. I signed a Purchase Agreement with Aspen Ridge and it says that the purchase price already included the HST (whether the closing date is before or after July 1st, 2010)
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  #127  
Old 2009-08-28, 03:13 PM
giligoulu giligoulu is offline
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I recently purchased a home at 500k and expected closing date to be at end of June. An amendment is attached to my agreement saying if closing is delayed to after July 1, 2010, the building will be responsible for paying the HST. So closing is the deciding factor for HST.
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  #128  
Old 2009-09-07, 09:21 PM
afici0nad0 afici0nad0 is offline
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Transitional rules for residential real property
Quote:
New homes
Generally, builders’ sales of new homes will be subject to HST when both ownership and possession of the home are transferred after June 2010. Grandfathering will be provided for certain contracts.

The provincial portion of the HST will not apply to builders’ sales of new homes that are taxable under GST when, under a written agreement of purchase and sale, ownership or possession of the home is transferred before July 2010.
http://www.kpmg.ca/en/services/tax/tnf/tnfc0920.html
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  #129  
Old 2009-09-30, 12:42 PM
CGB CGB is offline
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I found this CRA PDF useful & thought it could help explain some things to others.
http://www.cra-arc.gc.ca/E/pub/gi/no...otice244-e.pdf
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  #130  
Old 2009-10-08, 10:40 PM
DC3 DC3 is offline
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Quote:
Originally Posted by CGB View Post
I found this CRA PDF useful & thought it could help explain some things to others.
http://www.cra-arc.gc.ca/E/pub/gi/no...otice244-e.pdf
Very useful... I just found the answer to my question.. So I guess getting upgrades through the builder will be more compelling because we only pay GST.. That's of course if the upgrade costs are reasonable to begin with.

14. After entering into a written agreement of purchase and sale on or before June 18, 2009 for a newly constructed house, the purchaser requests that additional upgrades be made to the house. Does the harmonized sales tax apply to the additional amount payable for the upgrades?
Upgrades to a house will generally result in modifications to the existing agreement such that the upgrades form part of the written agreement for the purchase and sale of the house. In such a case, the tax applicable to the
purchase of the house will prevail. In this case, since a written agreement of purchase and sale was entered into on or before June 18, 2009, the harmonized sales tax will not apply and only the GST will apply on the total
amount payable for the house, including the amount payable for the upgrades.
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