Survey Finds Toronto Residents Unsure About Harmonized Sales Tax (HST)
Toronto home sales in July of this year fell 34 per cent according to the Toronto Real Estate Board, and a new study by a major Toronto real estate company found that the real estate market decline may be due in part to confusion over the new Harmonized Sales Tax, or HST, that was introduced on July 1st. British Columbia also implemented the HST at the same time and also experienced a decline similar to Ontario in their home sales.
The survey was conducted via e-mail and quizzed realtors about their experience with the HST and their clients.
Almost 44 per cent of realtors felt that the HST was to blame for the calm housing market, while almost 47 per cent said that buyers and sellers seem confused about how the tax works and how it affects real estate transactions. More than half of realtors are also receiving many questions about the tax and how it works. Of these misconceptions, the largest was that the HST applied to all home sales.
The HST only applies to newly-constructed homes, not resale homes. It also applies to services, fees and commissions that are involved in real estate transactions. The majority of the agents surveyed also said that less than 10 per cent of their business was new homes, and only 1.2 per cent of realtors said new homes made up the majority of their transactions.
Rising interest rates was the second-highest answer for why the market has decreased lately, with about 28 per cent of the responses.
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Comments
The number one thing that can be done to ensure that people can afford a home is to ensure that people have a job. The HST is estimated to increase investment by $47 million and almost $600,000 jobs.
The HST will not apply to homes under $400,000 and will not apply to resale homes regardless of the price.
The HST is part of this comprehensive tax package that will see 93 per cent of Ontarians receive personal income tax cut. With these cuts Ontario now has the lowest provincial tax rate in Canada on the first $37,106 of taxable income. In fact, 90,000 low-income Ontarians will no longer have to pay Personal Income Tax.
To help families we have introduced a permanent $260 Sales Tax Credit for low- and middle-income adults, children and seniors. In total $4.2 billion in transition payments will be delivered to help Ontarians adjust to the Harmonized Sales Tax. It is important to remember that every $100 in tax relief is equivalent to the 8% tax on $1250 in newly taxed items.
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