There are a number of programs available from both the provincial and the federal government, which provide help for home buyers in Ontario. Each of these can help you to save money, either directly, or when you file your tax return. Here are 5 helpful programs which can save you money:
Ontario Energy and Property Tax Credit
This is a tax credit that helps low to moderate income individuals with property taxes and the sales tax on energy expenses. The credit is part of the Ontario Trillium Benefit and refunded on your tax return.
Home Buyers Tax Credit (HBTC)
This is a tax credit for first time buyers which reimburses a portion of closing costs. The credit is refunded on your tax return. The max is $750.
Ontario Healthy Homes Renovation Tax Credit
This tax credit benefits seniors and can help them with the renovation costs to improve safety and accessibility in the home. Seniors are eligible for up to 15% back when they spend a max of 10,000 on home renovations. Amounts are refunded on your tax return.
Home Buyers Plan (HBP)
First time home buyers can withdraw up to $25,000 from their RSP’s tax free to use towards down payment and closing costs when buying a home.
GST/HST New Residential Rental Property Rebate
This rebate is for purchasers of a newly constructed home for use as a rental property and GST/HST was payable at closing. As a landlord, you are eligible to receive most of it back by filling out an application and mailing it in.
We hope you find these programs useful. With thanks to Sherry Love, Home Financing Advisor at Scotiabank Mississauga, for her expert input. You can reach Sherry at (416) 908-8563.
Got questions about home financing? You can equip yourself with all the latest money saving tips, by clicking here. Get all the answers to help you with the purchase of your next home.
The Ontario Government recently enacted legislation which will implement the much-dreaded HST Tax. This new tax will take effect on July 1, 2010.
The HST tax will effectively combine the Provincial Sales Tax of 8% percent with the Federal GST Tax of 5% percent, to create a new “harmonized” total tax of 13% percent. This new tax will be applicable to many real estate services which hitherto only had one or the other tax applied.
The HST will result in a 13% tax on new home construction, but my post today will concern those ancillary costs pertaining to the buying and selling of resale residential real estate properties in Ontario…
First, the good news….there is no HST tax payable on the sale of a resale home (residential). So the single largest dollar amount exchanged is not taxable under HST.
However, under the harmonized sales tax (HST), home buyers and sellers will have to pay extra tax on a range of services associated with the real estate transaction: services such as legal fees, moving costs, real estate commissions and home inspection fees. Currently, consumers only pay the 5% Goods and Services Tax (GST) on these services.
In a nutshell, after July 1, 2010, if you are a seller, there will be a 13% percent tax payable on the real estate commission you pay – currently there is only the 5% percent GST payable on this fee. Your lawyer’s fee will also be subject to the 13% percent HST. One bit of good news – the cost of a Condominium Status Certificate will remain the same; while there will be HST at 13% instead of GST at 5%, there cannot be an increase in the legislated maximum total amount of $100.
If you are a buyer, any Home Inspection you pay for will be subject to the 13% percent HST. And so will the cost of movers hired. In addition, the cost of the CMHC premium for “high-ratio” mortgages has traditionally been taxable for PST – this amount will now be taxable for the full 13% percent HST.
So one can see that, with the introduction of the HST, whether you are buying or selling a Resale Home in Ontario, costs will be going up.
A press release from the Ontario Real Estate Association earlier this year summarized some of these changes which will take place – the example that they used was for a resale house priced at $360,000, and it was determined that the HST would add over two thousand dollars in new taxes to closing costs. Please note, these taxes are in addition to the Land Transfer Taxes which exist for both the Province and the City of Toronto. OREA calculated that, in total, the HST would add $313 million annually in new taxes to resale home transactions.
CURRENT TAXES PAID, VERSUS THE NEW COMBINED HST TAX PAYABLE, ON A HYPOTHETICAL $360,000 REAL ESTATE TRANSACTION:
Table 1: HST and Resale Homes
Current Tax HST Tax
Taxable Service Payable New Taxes Payable
Premiums(1) $752.40 $470.25(2) $1222.65
Legal Costs $50.00 $80.00 $130.00
Fee/Commission $720.00- $1,152.00- $1,872.00-
$1,080.00 $1,728.00 $2,808.00(3)
Home Inspection $20.00 $32.00 $52.00
Title Insurance $24.00 $15.00 $39.00
Total New Tax:
1) CMHC premium of 2.75% for mortgage with a 5% down payment on a
(2) Consumers currently pay the 8% PST on mortgage insurance premiums.
(3) Real estate commissions are negotiable or may be a flat fee.
Estimated range of 4% to 6% used.
(4) Ministry of Finance, Public Accounts, 2007/2008.
(5) Altus Group, “Economic Impact of MLS(R) Home Sales,” June 12, 2007.
The HST Ontario Tax will add to the cost of buying and selling a resale home. Many market watchers are predicting a flurry of activity leading up to the July 1, 2010 implementation date, as buyers and sellers both try to avoid paying the tax.
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