Let me start by saying that this harmonized tax that the Ontario government is implementing on July 1, 2010 is once again another "money grab" by our government.  Thankfully, this will not impact re-sale home buyers or new home buyers that purchase properties under $500,000.  However, studies have shown that the harmonized sales tax will cost new home buyers in Ontario $800 million annually. 

But about one-third of homes in the GTA sell for more than $400,000.

The harmonized sales tax is a tax that combines the current GST (Goods and Services Tax) of 5% with the PST (Provincial Sales Tax) of 8%.  That means we will now be taxed 13% in total!  The province won't cut the PST rate of eight per cent even though the harmonized version will cover a wider range of goods and services.

With respects to homes, the province will exempt new dwellings under $350,000 in value.

Purchasers of new homes worth up to $500,000 will get a rebate on the provincial portion of the new tax.

But a family buying a $500,000 home would pay an additional $40,000 in tax.

The government also announced some tax credits and tax cuts and claimed that 93 per cent of Ontarians would get a tax cut under this budget.

The government has sold it as good for the province's long-term economic health, in part by making things more efficient for businesses.

The Canadian Taxpayers Federation said a lot of consumers are going to be shocked in just over a year.

There are three suggested options:

• Making the tax treatment of new housing neutral by applying a two per cent rate against all new housing
• tax the first $400,000 at 2 per cent then apply a progressive tax structure against the portion valued above $400,000
• update the GST price threshold option by adjusting for inflation.

The first option would be best for first-time buyers, while the second would eliminate the sharp rise in the marginal tax rate for those homes priced at more than $400,000.

In the end, the government is going to continue doing what the government see's fit for society instead of listening to those that voted them into the house (no pun intended).

Result -

If you are looking at buying a new home from a builder - do it before the implementation takes place!

If you are looking at buying re-sale homes, do it now before the HST starts being implemented on your closing costs (lawyers, home inspectors etc.)

CALL VANESSA TODAY! 416-357-9313!