Over the past 12 months there has been much discussion on the effects of HST on the real estate market and it certainly seems as though anxiety over its impact heavily affected the market in the early months of 2010 as buyers rushed to purchase before the introduction of the HST, and the subsequent slow down in the market from July to November. Many clients ask me how the HST will affect them when they come to purchase a house and the answer, quite simply, is if you are buying a resale house then very little. The HST is applicable to professional fees, e.g. realtor fees and any new household items you may need to buy for your new home, but does not apply to the purchase price of a resale house.
It is a different story for new build or substantially renovated properties*. These properties are subject to HST, although rebates are available to help out. There is the New Housing Rebate which is applicable to properties with a purchase price less than $450,000 and is applied against the federal portion of the HST. There is a further Provincial New Housing Rebate which applies against the Provincial portion of the HST up to a maximum payout of $24,000. Unlike the New Housing Rebate, the Provincial New Housing Rebate is offered regardless of the purchase price of the property.
Individuals who intend to use the house as a primary residence are eligible for these rebates, full details on eligibility and how to claim the rebates can be found on the Canada Revenue Agency Website
*A substantially renovated property is defined as a property where 90% or more of the interior has been removed and replaced, essentially a total gutting of the house.