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The question on everyone's mind is how the new harmonized sales tax implemented by Dalton McGuinty will affect your new home purchase. The feeling is quite similar as to when the government implemented the new land transfer tax last year. Everyone was rushing to purchase as quickly as they could to avoid the new tax. A similar situation has been created, however introducing this new provincial plan at a time when the economy is suffering does not make things easier for home buyers. For example to purchase a $ 500,000 home after July 1st 2010 could end up costing you an additional $ 40,000 dollars.
Other items that you will notice that will increase in price are newspapers, internet services, airplane fares, and construction costs. When construction costs increase, so will the price of new homes and condos in the City of Toronto. As of now there are only two options in order to avoid this tax in the City of Toronto if you are purchasing pre -construction real estate. They are as follows:
1. Purchase a condo or new home under $ 400,000 as units at this price range are exempted from the tax.
2. Purchase a condo or new home before July 1, 2010 in order to avoid the tax.
Another way to avoid this hefty tax is to look at purchasing a resale home or condo. Even though the purchase price is not directly affected by the new tax, buyers and sellers of resale homes will hurt as the harmonized tax would apply to many services that are currently exempt from PST. Such services include legal fees, real estate agent commission, renovation services, land survey reports, home inspections, landscaping and house cleaning services. Also affected would be the cost of labour for installations or repairs, additions, renovations, driveways, roads, fences, swimming pools and patios.
Toronto home buyers have still not recovered from last years imposition of the new City of Toronto land transfer tax. In a market where the volume of home sales has dropped and house prices have softened considerably, the last thing Ontario needs is a new 8 per cent tax on legal fees, agent commission and other costs related to the purchase and sale of new and resale homes . All these costs whether it is a new home purchase or a resale purchase, has made purchasing a very expensive venture.
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Source by Magallanes lorena