Ontario and British Columbia have started implementing the Harmonized Sales Tax (HST) in July of 2010. As a result of this major tax policy, provinces will save literally millions of dollars in their administrative costs with the implementation of this CRA-administered tax scheme. Foremost concern of a regular Mississauga property developer or even your friendly Mississauga mover is the implication of the federal HST on real estate industry of Ontario.Checkout Springfarm Yorkhill, Ontario Real Estate for more info.
Federal Harmonized Sales Tax in Overview
Ontario’s Harmonized Sales Tax, which is equivalent to 13 percent, is broken down into 8 percent Ontario tax and 5 percent GST. On the other hand, the HST for British Columbia is equivalent to 14 percent and is comprised of 7 percent B.C. tax and 5 percent GST. The HST that is going to be implemented in both Ontario and British Columbia shall basically adopt the same set of rules as well as tax base as that of the GST.
Direct Impact of HST on Ontario Real Estate Markets
Will the HST have a direct impact on the real estate market? Strictly speaking, there won’t be any direct effect on the real estate markets in Ontario. The real estate market is slight sloping downward at the moment. This decline is largely due to higher interest rates, increased inventories across all segments and the seasonal downtrend in the number of transactions and prices. It is during this period where there is slack in the business activities of a typical Mississauga mover.
The Ontario Real Estate Association has recently come out with their official position that the HST implementation will translate to an incremental $1,500-increase in the price of home resale. This incremental increase is due to the additional tax burden on real estate commissions, legal fees, moving costs, home inspection fees, home appraisal charges and property energy audits. So, expect an increase in the rates of your Mississauga mover the moment you hire their services.
However, in absolute terms, the HST will only account for 0.34 percent increase in the actual cost of a property resale and for most people, the incremental increase in the ultimate cost is negligible. This will not have a significant upward pressure on the number of transactions, prices and inventories in real estate markets in Ontario. The market can move upwards by about 4 to 5 percent, but this will be triggered by other variables not related to the implementation of the HST.