As of July 1st 2010, we will all be paying the new Harmonized Sales Tax (HST) on most goods and services, including new houses, apartments, and townhomes. A partial rebate will be available for both the federal and provincial portions of the HST, provided that the owner is buying the dwelling as a principal residence.
HST will also apply on properties that are substantially renovated. A structure is considered to be substantially renovated if it no longer contains more of the original structure than the supporting walls, roof, floors, staircases, foundation, and some other minor items. This rule only applies for dwellings that are renovated for the purpose of selling, and will not apply on a property renovated for an owner's own use.
Under the HST, there are provisions for rebates for home buyers, where the buyer is planning to buy the property for the owner's use as their principal residence. The federal portions of the partial rebate will remain the same as under the GST, with a maximum rebate of $6,300. The rebate is 36% of the GST up to $350,000, with the rebate amount being gradually reduced to $0 at $450,000. The formula for calculating the rebate for properties between $350,000 and $450,000 is as follows:
Assuming that the sale price is $400,000, the rebate for the federal portion of the HST would be $3,150 under this formula. With the 5% federal portion of the HST amounting to $20,000, and a partial rebate of $3,150, the total payable federal portion of the HST amounts to $16,850.
At 7%, the provincial portion of the HST will be more than the federal portion, but it does allow for a more significant partial rebate, and there is no cap on the sale price of the house. Regardless of the price of the dwelling, the rebate is 71.43% of the provincial portion of the HST, to a maximum of $26,250.
Using the example of a $400,000 home, the provincial portion of the HST would amount to $28,000. For those who qualify for the partial rebate, 71.43% would be rebated, for a rebate of $20,000.40, leaving $7,999.60. When combined with the federal portion payable, there will be a total HST of $24,849.60.
Partial rebates are also available for co-ops, floating homes, and housing on leased land; this rebate amounts to 4.47% of the price paid, to a maximum of $26,250.
HST will also apply on properties that are substantially renovated. A structure is considered to be substantially renovated if it no longer contains more of the original structure than the supporting walls, roof, floors, staircases, foundation, and some other minor items. This rule only applies for dwellings that are renovated for the purpose of selling, and will not apply on a property renovated for an owner's own use.
Under the HST, there are provisions for rebates for home buyers, where the buyer is planning to buy the property for the owner's use as their principal residence. The federal portions of the partial rebate will remain the same as under the GST, with a maximum rebate of $6,300. The rebate is 36% of the GST up to $350,000, with the rebate amount being gradually reduced to $0 at $450,000. The formula for calculating the rebate for properties between $350,000 and $450,000 is as follows:
(6,300 * (450,000 - B)) / 100,000
* Where 'B' is the sale price of the dwelling *
* Where 'B' is the sale price of the dwelling *
Assuming that the sale price is $400,000, the rebate for the federal portion of the HST would be $3,150 under this formula. With the 5% federal portion of the HST amounting to $20,000, and a partial rebate of $3,150, the total payable federal portion of the HST amounts to $16,850.
At 7%, the provincial portion of the HST will be more than the federal portion, but it does allow for a more significant partial rebate, and there is no cap on the sale price of the house. Regardless of the price of the dwelling, the rebate is 71.43% of the provincial portion of the HST, to a maximum of $26,250.
Using the example of a $400,000 home, the provincial portion of the HST would amount to $28,000. For those who qualify for the partial rebate, 71.43% would be rebated, for a rebate of $20,000.40, leaving $7,999.60. When combined with the federal portion payable, there will be a total HST of $24,849.60.
Partial rebates are also available for co-ops, floating homes, and housing on leased land; this rebate amounts to 4.47% of the price paid, to a maximum of $26,250.
