The Provincial government has announced that it intends to combine the eight percent Provincial Sales Tax with the five percent Federal Goods and Service Tax, thus creating a 13 percent Harmonized Sales Tax called (HST)

What this means to Buyers and Sellers involved in a Real Estate transactions:

• HST will not apply on the purchase price of re-sale homes.
• HST would apply only to such services such as moving costs, legal fees, home inspection fees, and Realtor commissions. Any such related service that you would be using for your real estate transaction would be subject to the Harmonized Sales tax. (exactly the same services that were subject to GST)
• HST will apply to the purchase price of newly constructed homes (condos). The Province is proposing a rebate so that new homes across all price ranges would receive a 75 per cent rebate of the provincial portion of the single sales tax on the first $400,000. For new homes under $400,000, this would mean, on the average, no additional tax amount would be paid compared to the current system.
• Sales of new built homes/condos under written agreements of Purchase and Sale entered into on or before June 18, 2009 would not be subject to the provincial portion of the single sales tax, even if both ownership and possession are transferred on or after July 1, 2010.
• The tax would also not apply to sales of new homes under written agreements of purchase and sale entered into after June 18, 2009 where ownership or possession is transferred before July 1, 2010.

• When the services straddle the HST implementation date of July 1, 2010, the tax charged for the service may have to be split between the pre-July 2010 date and the post-June 2010 periods. The HST will generally not apply to a service if all or the majority of the service (90% or more) of the service is performed before July 2010.

• 4 key timelines are important (see below). All are based on the earlier of the time the consideration is either due (in general an amount is due on the date of the invoice or the day required to be paid pursuant to a written agreement), or is paid without having become due. If consideration is due or paid,

• Before October 15^th, 2009, HST will generally not apply (however, see above transaction rules for new housing)

• From October 15^th, 2009 to April 30^th, 2010, certain business that are not entitled to recover all of their GST/HST paid as input tax credit may be required to self-assess the provincial component of the HST with respect to goods or services supplied after June 30^th, 2010.

• From May 1, 2010 to June 30^th, 2010, HST will generally only apply for services supplied after June 30^th, 2010.

• After June 30^th, 2010, HST will generally apply. An exception to this rule would be ownership of property that is transferred before July 2010 or the invoice related to services provided before the July 2010 date.