CBC News
Residents of Ontario and B.C. are unsure about how the harmonized sales tax (HST) affects real estate transactions, a new study finds, and the confusion is being blamed for a slide in home sales.
Home sales in Toronto fell 34% in July, according to the Toronto Real Estate Board.
TREB reported that there were 6,564 sales last month, down from 9,967 in the same month in 2009. Home sales were at the lowest level since 2002.
“The level of July sales remained below the expected long-term trend. The market has become more balanced following record monthly sales through most of the winter and early spring,” said board president Bill Johnston, in a release.
Vancouver too has seen a sharp decline in home sales. According to the Real Estate Board of Greater Vancouver, home sales dropped 45.2% in July, with 2,255 homes sold in July 2010 versus 4,114 homes sold in July 2009.
Confusion around how HST applies to homes sales could be to blame. A new survey of realtors released Thursday by Royal LePage finds that 43.9% feel the tax is playing a part in cooling the housing market.
“According to our realtors who work in B.C. and Ontario communities every day, misconceptions about the HST are having an effect on the market in both provinces,” said Phil Soper, president and chief executive of Royal LePage Real Estate Services, in Toronto.
According to the brokers, 46.7% of comments from buyers and sellers indicate confusion about how the new tax affects home sales. And 57.1% of realtors say they get “many” questions about how the tax works.
The study was conducted via email at the end of July with Royal LePage’s 765 realtors in Ontario and B.C.
The harmonized sales tax took effect on July 1 in Ontario and B.C. It applies to the sale price of a newly built home — not a resale home — and fees for services and commissions incurred during the real estate transaction.
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Hi, my name is Grahame with the Ontario Ministry of Revenue. I read your post and wanted to add the following comments.
The number one thing that can be done to ensure that people can afford a home is to ensure that people have a job. The HST is estimated to increase investment by $47 million and almost $600,000 jobs.
The HST will not apply to homes under $400,000 and will not apply to resale homes regardless of the price.
The HST is part of this comprehensive tax package that will see 93 per cent of Ontarians receive personal income tax cut. With these cuts Ontario now has the lowest provincial tax rate in Canada on the first $37,106 of taxable income. In fact, 90,000 low-income Ontarians will no longer have to pay Personal Income Tax.
To help families we have introduced a permanent $260 Sales Tax Credit for low- and middle-income adults, children and seniors. In total $4.2 billion in transition payments will be delivered to help Ontarians adjust to the Harmonized Sales Tax. It is important to remember that every $100 in tax relief is equivalent to the 8% tax on $1250 in newly taxed items.